Nobody’s perfect when it comes to our personal financial life. Everyone does things that they regret about later. The key question is to understand the significance of the credit card mistakes and how hard they can affect your personal financial life and how it is difficult to get out of debt. With the most common credit card blunders, it is not an easy task. Committing some of the deadly mistakes can get you into serious financial trouble and you may drown in a sea of debt. Here are some credit card mistakes that must be avoided if you’re using a plastic.
- Making only the minimum payments: The credit card companies and the financial institutions will love it when you pay off debt slowly as they are the ones who will benefit by charging interest rates. You must hate such a habit of making only the minimum monthly payments as it may push you deeper into debt. Save enough money so that you can make payments in addition to the minimum monthly payments. The sooner you pay off your debts, the sooner you can become debt free.
- Making late payments: Usually you will see that most credit card companies are very prickly about the late payments. They will charge you fees for a payment that is even late by a few minutes and this fee is not a meager amount. Nothing can be worse than piling up late payments and penalty fees as this will unnecessarily boost your monthly obligations. Depending on how late you’ve been in making the payments, the card issuer will also report to the credit bureaus and this may trash your credit score. Take all necessary steps to make timely payments and avoid late fees.
- Having too many cards: Nowadays, the citizens of the US are boasting at least 4-5 credit cards at the same time. They are using it simultaneously and incurring debt on all the cards. This augments their debt burden and is the primary reason behind the large number of bankruptcies within the nation. With more cards, you will be increasing the possibility of payment slips and you may also become a victim of identity theft.
- Maxing out your card: Maxing out your card may also have a bad impact on your credit score as 30% of your credit score is comprised of the credit utilization. Maxing out your credit card may not have an immediate impact but this shows that you’re not budgeting and tracking your expenses. This also implies that you don’t have enough savings to cover your unexpected expenses.
Thus, if you want to leave behind debt and free yourself from the credit card debt cycle, you must avoid committing the above mentioned credit card blunders. Use credit only when you experience a financial emergency and manage your personal finances so that you can make timely repayments.