The amount of money you earn, regardless if thousands a plenty or not, is no excuse to live like a one day millionaire; and wake up the next day and the following days living paycheck to paycheck.
This predicament is worsen because of your heavy credit card usage. Yes, they’re helpful in more ways than it puts a dent on your financial situation. But you seem to be forgetting something: qualifying for a credit card is a privilege.
Credit card does not mean “power” and “free money.” if you fall prey into swiping your card to purchase anything and everything you want, there will be repercussions.
Be a responsible card holder and beat the habit of using it frequently even at times when you don’t need to. Here are 6 most common credit card mishaps everyone with a credit card, and those who plan on applying for, should avoid at all cost.
Don’t wait to get reported to the credit card bureaus before you pay your bills. Also, not only do late or missed payments bring your credit score down but also cost you hefty fees and increased interest rates.
Maxing out your credit card. Whenever we’re out roaming the malls or shopping streets, we often find ourselves attracted to items or products we want but don’t need. This is a case made stronger when there come flashes the words: “sale,” “promo,” “discounts,” and the works.
Maxing out your credit card limit or getting close to doing so puts you over the edge. You’ll get charged with exceeding fees and a hefty amount of interest rate both of which are a pain in your wallet. Do not go over the limit for you to keep a good credit score and achievable monthly dues.
Minimum payments. Albeit the amount you ought to pay monthly is already indicated in your bill statement, we suggest you pay more than the required due. Chances are the amount due only shoulders the monthly interest fee and minimal principal amount.
Whenever you have some extra cash, don’t use it for buying the latest smartphone in the market when you still have a fully functional and updated one. Instead, use it to pay for your credit card—more than the minimum payment. This shall save you from increasing fees and impulsive purchases (since you’ll use your extra cash to pay for your card).
Paying late. If you think missed payments won’t hit hard on your credit score, review your statement of account and think again. You have no acceptable excuse for paying late especially since your due date is written in your credit card bill, unless you encounter an emergency or unforeseen circumstance, you get a pass for that one.
If you think your payment due doesn’t exactly coincide with your paycheck or the right time, feel free to contact your credit card company and request to reschedule your due date at a day in which it aligns with your ability to pay.
Applying for more credit cards. If you don’t need it, don’t take it. People often think that the way to get out of credit debt is to apply for another one. Even if you get approved for a card, it could terribly hurt your credit score.
Moreover, if it appears you have applied for multiple credits in a short period of time, you would come off as “desperate” and a “high-risk borrower” which will negatively affect your application for other offers and/or loans.
Unlimited source of cash. Since paying off a purchase is just a swipe away, many think a credit card is an unlimited source of money. Cardholders should always remember that having a credit card does not mean you can live beyond your means. It is okay to treat yourself and splurge in an occasional shopping but don’t overspend and buy things impulsively.
Spending to earn rewards. Again, your credit card isn’t an unlimited pass. Spending to earn reward points isn’t rewarding at all if you spend and use your credit card more often that you normally would if not for the reward points.
Many sees credit card as a good means to build a well-steady credit score. However, others aren’t aware enough that their impulse purchases, poor financial decisions and bad credit card habits greatly reflects their credit scores. Use your credit card responsibly and it should lead you to attaining your financial goals.
Have you experienced any credit card troubles? How did you deal with it? Share us your experience!
About the author: Chie Suarez has spent time figuring out ways on saving money and stepping away from her go-to retail stores. She then became a writer for Speedy Money which offers hassle-free loans services.