4. Cash Advances

Does your credit card company send you cheques on your mail? These cheques are nothing but the cash advances. Beware of such cash advances, it might look tempting but avoid taking them. Cash advances usually have a higher interest rate than your ongoing interest rate. An automatic fee of 2-4 percent is charged on the amount of the cash advance in addition to a higher interest rate when compared to your regular credit card balance. It is not a good idea to use cash advances offered by the credit card companies. Try to use them in a true emergency.

5. Rewards on credit cards

As long as you pay the credit card balance properly each month, there is nothing wrong with using credit cards to earn rewards. But, if you are unable to pay off the money you spent during the month, then the rewards earned from credit cards are often worth far less than the interest accrued. There are many credit card companies that offer "free" rewards, such as cash back or airline tickets. But these free rewards are not actually free as it has many hidden charges.  This means you need to spend extra money, sometimes more than you usually do. In general, any reward you earn on a credit card will be just 1 percent of the amount you spent to qualify for the reward.

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