Credit Card Mistakes You Don’t Know You’re Making
Having a credit card means that you now have access to more convenient transactions without having to have cash on hand all the time. A credit card, however, means that you need to adopt the correct financial attitude and the right habits so you do not end up getting buried in debt and annual fees. Here are some mistakes that you might have been making that you are not aware of yet:
Paying Your Bills Late
When you just had your credit card, you might not be thinking about your dues seriously. The thing is, these matter and late payments can greatly affect your credit score. When you keep on paying late, the interest and fees can all add up and this can lead to paying more in the end.
“What can do you the most harm is paying late or not paying at all,” says financial expert Barry Paperno. The effects of paying late can hit you right away and it could take a long time before you can recover. If it takes you really long to settle your dues, you can get hit with a charge-off and this can stay on the record for seven long years.
Applying for a Card and Not Using It
Just as most other companies, the end point of your credit card from the bank’s viewpoint is for them to make a profit. However, if you do not use your credit card, they apparently earn nothing from you. If you have not used your credit card for quite some time already, your bank can classify your card as inactive and close your account.
If you do not use your card that often, you can try placing a small recurring fee and paying it off each time. You should also use it for some transactions you usually get into, such as groceries.
Closing Your Card for the Wrong Reasons
Sometimes, you might find out that you do not really need your credit card that much. If this is the case, closing your card is not the exact solution. When you close your cards, this has a direct impact on your credit history and most of the time, it is not positive.
When you decrease the amount of credit available t you, you actually end up increasing your credit utilization ratio and this can hurt your credit. If you feel like closing your credit card, do consider just using it once in a while just so that you can keep the account alive. There could also be times when closing the card could mean more sense, such as when you want to avoid annual fees. If this causes a more favorable budget, think about it carefully.
Using All the Credit You Are Given
Just because you are given a reasonable amount of credit while you can pay all of that on time does not mean you should spend all of it. When you swipe your card excessively, not only are you more likely to hurt your budget, it could also hurt your credit score.
You issuer takes your utilization rate into consideration and they would like to see that such does not get too high. A rule of thumb is to aim for a utilization rate under 30 percent, but this does not really mean that you need to get a balance on your cards.
Spending Just to Earn Rewards
Credit card rewards look tempting and you might be pushed to spend more to earn them, but this is the wrong way to use your credit card. You might end up buying a lot of things that you do not really need and will push your budget to the wall.
When shopping, be mindful of the reason as to why you are buying each and every item. When you are about to fall in line for the cashier, take a second look at the things that you are about to buy and ask yourself once again if you really need them. If the answer is no, then consider delaying your purchase.
While you now have better access to a lot of purchases, you also have to be more responsible financially. Do you know any other common credit card mistakes for newbies? Share them with us in the comments below
More in Debt
Crowdfunding: A Peek Into the Future
In a not so distant past, crowdfunding was not even a word. In fact, there are still more people out there...August 27, 2018
Interesting Crowdfunding Projects to Support
Successful businesses all begin with an idea. These ideas often come from creative minds who saw better solutions to problems or...August 24, 2018
Queen Elizabeth – 92 Years of Living a Luxurious Life
There are many other monarchs in the world, but the most popular would really have to be Britain’s Queen Elizabeth II....August 23, 2018
Its Performance First for Luxury Cars Makers, Not Planet
Purchasing an electric car has become a lot like having a salad. It’s good for you even though it’s not the...August 22, 2018
What We Can Learn from These Entrepreneurs who Raised More than $1 Million through Crowdfunding
Crowdfunding is not easy and it certainly is not for everybody. Besides the wealth of knowledge that is available online about...August 21, 2018
Worried About Your Student Loans? Here’s How You Can Repay Them
One thing that keeps students about to graduate happy and jittery at the same time, is the realization that another big...August 20, 2018
Things to Do when Debt Collectors Call
Having a standing debt is not easy. It gives us a lot of stress just thinking about how to pay. Receiving...August 17, 2018
Investment Mistakes The Ultra Wealthy People Would Never Make
You might have been repeatedly asking what wealthy people do that you do not do. While these millionaires and billionaires just as...August 16, 2018
How Charles Lazarus Turned Toys R Us Into a Toy Empire
On June 29, 2018, the biggest toy store in the country finally closed all of its doors worldwide, ending the toy...August 15, 2018