Credit cards are convenient, practical for emergencies, and can make it easier to avoid loss from fraud. However, credit cards can also pose financial challenges. Some individuals rely on their credit cards and use them for all expenses and don’t always pay them off on time. Credit cards are not for everyone and must be used and handled in a responsible manner because if they are not, they can hurt you financially. Here are a few credit card mistakes to avoid making so that your financial health isn’t compromised:
1. Opening Too Many Cards
A few credit cards in your wallet are okay, but having too many can really be a problem. Collecting too many credit cards is actually the No. 1 credit card mistake people often make. The more credit cards you have stashed away in your wallet, the more temptation you’ll have to use them and get deeper into debt. Some people use credit cards as a form of supplemental income and don’t realize that they’re racking up a trail of debt every time they use them. Debt they must pay interest on plus, annual fees. And even if you pay your credit cards on time, the simple fact that you have too many credit cards can negatively impact your credit score and hurt your ability to borrow money.
2. Ignoring The Fine Print
Not reading the credit card’s fine print can get you into a lot of trouble. This is usually written in very small print at the bottom of the offer and is where you’ll find information about when low interest rates expire and the cost of balance transfers. Sometimes a credit card might sound attractive, but once you read the fine print, it’s a totally different story.
3. Confusing Introductory Rates
Credit card companies offer attractive introductory rates to sign you up, but if you misunderstand the terms it can spell financial trouble in the future. Once the introductory period is over the interest rate can be surprisingly high and not worth getting the credit card.
4. Not Looking For Best APR
Many people don’t rate shop when looking for a credit card and go with the first offer they get. Not shopping around for the best APR can really hurt your finances because you’ll end up paying higher interest rates than you would otherwise.
5. Not Finding The Best Credit Card
People should do their research to find the best credit card that meets their personal requirements. Some want cash back rebates, while others prefer frequent flyer miles. Don’t choose a card for the wrong reasons.
6. Not Paying More Than The Minimum
When you use your credit card, make sure that you pay more than the minimum payment. When you can, pay your balance in full. If you can’t, pay a bit more than the minimum so that you can pay it off faster.
7. Not Paying On Time
Late payments result in a ding on your credit report and can cost you additional money in late fees and charges.
8. Buying Too Many Things You Don’t Need
When you use your credit card to buy things you don’t need, you’ll rack up so much debt that you won’t know how to get out of it. Make sure that your spending habits are in check and rethink the purchase if you use your credit card.
9. Not Looking At Your Monthly Statement
In this digital age, the opportunities for mistakes to appear on your credit card statement are growing. Merchants can mistakenly charge your card twice or for the wrong amount and hackers can lift your card number from a compromised site. Your credit card company could make a clerical error and not record a payment you made. If you don’t read your montly statement, you won’t be able to catch these mistakes and correct them.
10. Going Over Your Credit Limit
Credit card companies charge hefty fees when you go over your limit. Try to stick to your budget when using your card for purchases and review your balance regularly so you know how much credit you have available.
