Credit cards can make or break you. It may work to your advantage or against you. Have you asked yourself if you have been using your credit card the right way?
Just because you are getting different offers to sign up for a credit card, it doesn’t mean it is right for you. Especially if you are in a financial crisis, incurring more credit is not a good decision.
To make the right decision in every purchase and avoid credit card mishaps, here are 10 mistakes you should avoid:
- Paying the minimum balance each month
Not paying your balance in full can get you more into debt that you ever expect. Which can pose a significant danger in your finances. Avoid having a large balance on your credit card because it is hard to pay. Have a budget and stick to it. Do not spend more than you earn.
- Not setting up autopay
If you are still relying on your calendar or memory to make your credit card payment, then you can be in more trouble because most of the time, you can forget. To void late fees and a dent to your credit, set an auto-debit pay on your account. By doing this, you will not miss any due date, just make sure you have enough funds on your checking account before your due date.
- Maxing out your credit card.
Acquiring more credit in your card until you max it out is never a good idea. Racking up a high balance can be damaging even if you pay your bill in full every month.
Keep your balance low so you won’t have to worry about paying it next month and you can easily manage your finances.
- Loaning your credit card
If a friend asked you to borrow your credit card and you are too nice to oblige, then you will have a problem in the future.. When you loan your credit card to a friend or to a family member, even out of goodwill, you have no control on how much they will spend.
- Suddenly canceling your credit card
When you decide to cancel your credit card out of anger or frustration because of the bills that you have to pay, it will jeopardize your credit score. You will still be paying the annual fees even if you are not using your credit card. Continue using your credit card and get more out of its value then you can have a calm and informed decision before you finalize the cancellation.
- Signing up for more than one credit card at once
It is understandable that you can get excited sometimes by having more than one credit card. The thought of being able to purchase the items you desire can fuel your desire to apply for too many credit cards in one go. This can be a red flag to licensed money lenders because they can start getting suspicious when a person ha smany credit card applications. Also, you have to ask yourself if you are prepared to pay multiple credit card bills that you rack up in a month.
- Turning a blind eye on your billing statement
If you let your bill be stuck in the shelves, chances are, you are risking to miss your payment on its due date. It could also make you miss important communications or announcements about changes on your credit card terms. Your billing statement could also help you spot any fraudulent activity that is done on your account. So always read it and call your lender if you have questions.
- Not reporting your lost or stolen card immediately
In an unfortunate event that you have lost your credit card, you must report it right away. Do not wait for a few days before you make the call to have it cancelled. You are risking your credit card to be used by fraudulent people and make purchases using your credit card. Report it as soon as possible before it becomes a pain in the neck.
- Taking cash advances
Most credit cards have the feature to convert your credit limit into cash through cash advances. It may sound tempting especially in times that you need a cash-on-hand, it will be a bad idea. Taking a cash advance allows lenders to charge higher interest rates than on regular transactions. What’s worse is they don’t have a grace period on cash advances so the interest rates are charged immediately.
Before signing up for a credit card, make sure to research about the advantages and disadvantages so you can get more value out of it. As you get the right credit card for yourself, you will be able to use your credit card wisely.
