Whether paying for a transaction in a physical store or purchasing an item online, that credit card in your hand does offer a lot of convenience. On the other hand, misuse and abuse can only lead to financial troubles, especially if you commit the following mistakes:
Buying Things You Can’t Afford On Credit
Don’t let your impulses drive you to excessive spending. Impulses mess up the normal decision-making process, affecting your ability to think through consequences of any action, such as incurring more debt that would most likely take you years to pay. Stop buying things you don’t need without any regard to whether or not you can actually afford those things.
Maxing Out Your Credit Card
Maxing out credit card limit is a common mistake for many cardholders. When you surpass your limit, you may be charged with over-the-limit fees and penalty interest rates, which has a negative effect on your credit rating. A poor credit score will make it difficult for you to get an approval for other financial services that you may need in the future, such as loans.
Disregarding Your Own Privacy
As a credit card owner, it’s your responsibility to guard your credit card details carefully. Online predators are always looking for ways to steal credit card information, which they use to make fraudulent transactions. Be extra careful when making a purchase over the telephone. Make sure your conversation isn’t being overheard and don’t transact unless you absolutely trust the person on the other line. Also, don’t give out your credit card info online, unless you’re sure that a site is safe and reputable.
Making Minimum Payments Only
Are you one of those people who only make minimum payments on your credit card debt? Although paying the minimum amount allows you to ward off credit card collectors, it can only prolong the debt and may cause more trouble especially if you miss a payment due date.
Neglecting Payment Deadlines
You will be imposed accrued charges if you always pay late. The amount you have to pay gets bigger if you neglect to pay your credit card bills on time. If you aren’t aware, overdue bills also affect your credit score. If you think it’s a hassle to pay in the bank personally, you can take advantage of the perks of online banking. Don’t forget to pay early as possible.
Acquiring Multiple Credit Cards
Planning to apply for a new card? Hold it right there! How many credit cards do you have at the moment? Having too many credit cards is not as good an idea as it seems. You lose points whenever you apply and got approved for a new credit card. Sticking to one card is easier to manage and it will provide you a good credit score. Before you push through with a new credit card application, consider if you really need it. Don’t apply for a credit card just because you like the rebates, rewards, and bonuses.
Financial success can be attained if you know how to manage your finances. There are a lot of ways on how to do it, and you can get started by avoiding these seven mistakes.