A credit card is an excellent way of making life easy, and in today’s world, it’s almost impossible to survive without one, but it can also become your most dangerous item when misused. It can cost you a lot.
Using your credit card in the right way is key to staying out of debt. This will help to protect your credit score, because making mistakes in this area will lead you to a world of debt and bad credit, and it is tough to get out of.
One of the essential points to note when dealing with credit cards is that: their payment should be your priority. It is effortless to go off track with some common credit card mistakes, but when you learn early enough what not to do, then you might make it and not end up in a terrible mess.
Mistakes To Avoid With Your Credit Card
Most people are indeed in debt because of their credit cards. Here are some mistakes you should avoid if you do not want to end up in bad debt.
Paying Only The Minimum
Credit card lenders are extremely smart, and they make the whole deal look extremely good to a user. They will tell you that you do not need to pay the entire amount you owe at the end of the month, and you can pay as little as $25 each month. This is called the minimum payment and making this kind of payment will increase the amount of money you owe each month.
It will also increase the time needed to clear the credit card balance, and also increase the interest you are paying on the card. All of these things will increase, which means that you will end up paying much, much more than you were initially supposed to pay. Our advice is don’t just pay the minimum amount, but rather increase the monthly payments so you can clear your balance faster than expected.
Making Late Payments
This is another grave mistake when it comes to credit cards. Never allow the due date to pass by before paying. Sending your monthly payments on time will save you a lot of headaches. Find ways of remembering the due dates for all your credit cards, so you never miss a single payment.
Late payments attract additional fees that will again increase your overall amount due. It will also become complicated to pay back all of your balance in the end.
Falling behind with just 30 days will also impact your credit score negatively, and if the payment goes into 60 days late, then the credit issuer will raise the interest rate and charge you very high penalties for this.
Loaning Out Your Credit Card
Do not loan your credit card to anybody else, as you will not have any control over the purchases they will make. This means that you will end up being responsible for paying the bills even when someone else had borrowed the credit card.
Never allow anyone else to borrow your credit card unless you are more than prepared to pay for the purchases they make on the card.
Ignoring Your Billing Statement
If you do not open your credit card statement, then you will risk missing out on your due dates and end up paying less than you should have paid. Ignoring this payment will also mean that you miss some important announcements that could make changes to your credit card terms.
Your billing statement is also often the first alert you will get of any fraudulent activities on your credit card account. Always ensure that you read the billing statement and check to confirm that all the charges and spending are accurate.
Credit card debt is one of the worst debts that has affected most people in America. Almost half of Americans are in deep credit card debt, and as of the last year, this debt hit a record high of nearly $930 billion, as per the report by CNBC. However, if you follow the above simple steps, you may not end up in credit card debt, which is hard to deal with.