The use of credit cards is one of the safest and the most convenient ways of making purchases
anywhere. Whether you are purchasing online or buying somewhere, the use of your credit
card gives substantial benefits, purchasing power, and financial protection that can be good for
you and your family. However, if not used properly, credit cards can also harm your financial
status that may lead to financial troubles, credit, and even bankruptcy.
In this article, you will learn the top mistakes people make when using a credit card. Making
these mistakes can cost money and may damage your financial capability.
1. Overspending and attaining too much debt
The access to a credit card can make someone overspend and do unnecessary
purchases. Likewise, misusing your credit like buying things which you cannot normally
purchase through cash may lead you in attaining too much debt as credit card purchases
usually come with high-interest rates that make the debt grow fast.
2. Late payment
It is important to always remember your due dates and pay your monthly obligations on
time. This is because late payments can cost you money with the additional charges
being made as a penalty for any late payment. This situation can also affect your credit
score while some banks may increase your interest rate depending on the number of
days of your late payment.
3. Only making minimum payments
Paying only the minimum payments is one of the frequent mistakes that new credit card
users usually commit as they tend to take it easy in paying their debt. The minimum
payment will only increase the amount of time you can fully pay your credit card debt
while giving the banks higher interest rates. It is best to increase your monthly payment
to pay your debt at the soonest possible time at a lower interest rate.
4. Not checking and ignoring your billing statement
Missing credit card payments and not knowing the cost of minimum payments is often
the result of not bothering to check the billing statement properly. All these information
are indicated in your billing statement. Furthermore, fraudulent transactions and
transaction errors can also be detected and reported immediately if you properly check
your billing statement.
5. Maxing out your credit card
Fully consuming your credit limit will put you in danger of paying penalty in your interest
rate and over-the-limit charges and fees. It is advisable to not go beyond 30% of your
credit limit as it also impacts your credit score. Overall, maintaining a good credit card
balance will result in a good credit score and an attainable payment amount.
The best way to maximize your credit card is to use it wisely and properly. Avoiding the
mistakes being listed above will definitely help you in properly using your credit card. Buy only
things that you can afford to pay monthly in order to maintain a good credit rating and lower