Major Credit Card Mistakes To Avoid

by JT on December 8, 2010

Credit cards give us the possibility of buying something now and paying for it later. But if you aren’t careful, you can buy stuff now and be paying for it for a long time to come. So to that end, we’ve put together some major whoppers you could be guilty of when it comes to managing those credit card accounts. How many of these are you committing?

Major Credit Card Mistakes To Avoid

1. Not paying off your balance in full each month.
If you only pay part of your monthly balance, the credit card companies are going to start loving you! If you pay down your credit card balance in full every month, you won’t be paying any interest. Anything less than that and you will incur interest, which can start adding to your debt very quickly indeed.

2. Paying your bills late.
Not only can this harm your credit rating, it can also bump up your bill. Most credit cards have some kind of penalty in place that will be charged to your account if you don’t make your payment on time. Always be sure you allow enough time for your payment to make it to its destination, and for it to clear your account successfully.

3. Having plenty of cards.
The more credit cards you have, the harder it will be to keep track of them. Do you know what the balances are on your cards at the moment? If you have no idea, you could be in trouble.

Always keep to one card if you can. Two are okay if you have one that’s a 0% interest credit card so you can pay down a debt, with the other one as an everyday card you pay off in full each month. But be sensible. Don’t get yourself in trouble with lots of cards.

4. Sticking with a card that has a high interest rate.
Ideally, it shouldn’t matter how high your credit card interest rate is if you pay it off in full every month. But this does not apply to many credit card holders.

If you don’t yet fall into the group that doesn’t maintain a balance, and you have debts on your cards, you should definitely be shopping around for the best interest rate you can find. Make sure you compare credit card offers. If you are trying to eliminate a debt on one or more cards, then you don’t want to be paying more than you have to.

5. Don’t use credit cards to buy things out of impulse.
If your surplus cash each month adds up to about $100 after you have paid all your bills, should you really be going out and buying a top of the range computer?

Credit cards do not always encourage smart spending, so you should think carefully before you buy anything with them. This is the hurdle so many people end up facing. Credit card spending allows you to experience instant gratification, and this gets a lot of people into trouble. It’s easy to fall in denial here, after you use your credit card: you don’t think about what might happen further down the road and you’d rather not think about money until the time your bill comes in.

To be truthful, if you want to avoid getting into trouble with your credit cards and if you’d like to avoid piling on the card debt, then think before you use your cards.

This might sound like an alien concept to some, but just try it. You might be amazed by your ability to stay clear of debt and sidestep these credit card mistakes.

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{ 1 comment… read it below or add one }

1 Doable Finance December 20, 2010 at 9:18 am

Using credit cards is one of the best ways to pay for merchandise. However, many folks make mistakes thinking it’s their money they spend at the time. It’s not. You are not just borrowing it, you are renting it. Anything you rent, you must return it to its owner intact within the mutually agreed upon time.

Your neighbor is decent enough not to charge you interest when you borrow from them. Your lending institutions would make your head spin for demanding back their principal plus interest. The more time it takes you to pay back, the more your head will keep spinning.

A time comes that you feel sick to your stomach. You would then curse the day when you rented the money to buy something that you didn’t actually need. But that’s the American way of spending. Don’t complain when you keep borrowing without actually thinking someday you will come to your senses. For many folks, that day never comes.

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