1. I don't need to look around for the best cards.

Compare the various cards available. Often, what tips our decision to go in for a credit card are emailers, or a telemarketer's pitch. Not a good idea to get into this blindly!

Initial fees, annual charges and interest rates are different for different credit cards. And these can be cut down substantially, if only you chose your card carefully.

Be sure what you are getting into: 'No annual charge', 'Low rates' sound superb, but they may just be introductory offers.

Also Read: All About Add-on Cards

2. I need at least 5 credit cards!

There's no two ways about it: keep just one or two cards with you. If you have a bunch (especially gold or platinum cards), you are just spending thousands on something you don't need. Some status symbol!

Many cards also mean many bills. Chances are, you will miss a payment, if you have enough money to begin with! Having multiple cards is like an open invitation to overspend.

3. I don't need to pay the bills on time. I can roll over my credit.

This is a recipe for disaster. Your credit most often comes attached with exorbitant interest rates (about 2% to 4% pa). Not worth it, don't you agree?

Default on a small amount, carry forward some of your balance, and you:

Pay exorbitant interest rates.

Lose the benefit of the interest-free period on all outstanding and future purchases.

Are liable to pay 12.36% service tax on the interest amount, which increases your overall interest cost from 27% to 54%.

Make sure you pay off any outstanding balance on your cards.

Also Read: Why Credit Cards Have Many Fees