10 Credit Card Mistakes You Should Avoid

To avoid credit card mistakes, it is necessary that we take our credit card seriously. Credit Card can provide you with lots of benefits and prove to be a savior in your shaky financial condition if you use it with “Responsibility”. Mark the word Responsibility.

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The moment you become a little careless about your credit card usage, it can make you regret soon. If you want better conditions with your credit card. AVOID MAKING THESE 10 COMMON CREDIT CARD MISTAKES

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1. Not Paying Dues on Time

Paying late is never a good idea and when it comes to paying late your credit card dues, it can seriously affect you financially. Paying your dues late up to 30 days can lower your credit score by a huge margin.

Not only this, paying dues late can make your interest rate higher and you end up paying more interest as a penalty. It can also lower your chance of getting a loan in the near future. Be a bit more concerned about your credit card and try to make the payment on time.

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2. Making Only Minimum Payment

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If you are only paying the minimum amount of payment every month and it should be a point of concern for you. Well, it’s a well-planned strategy by your credit card issuer to allow you to make the only minimum payment. In this way, it not only increases your time period to pay off your balance but it also means paying an increased rate of interest.

Making payment more than the minimum decreases the time in paying off your balance at a much low cost plus it also helps in increasing your credit score which can be beneficial to your financial status.

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3. Maxing Out Your Credit Card

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The worst mistake you can do with your credit card is by maximizing it. It can be financially dangerous in many cases. Let’s see the list of consequences you can face by maxing out your credit card:-

  1. It will increase your credit utilization ratio which is bad for your finance.
  2. A high Credit utilization ratio means a very low credit score.
  3. You might charge a higher interest rate as a penalty.
  4. The amount might be harder to pay for you.

Maxing out your credit card ends up increasing your credit utilization ratio over 30% which is itself a red sign. So be more conscious about your credit card and avoid maxing it out.

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4. Ignoring the Credit card terms

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Let’s be honest we don’t have a habit of reading those long pages of terms and conditions that too without even picture, it seems boring huh? Well, that’s where we commit the worst mistake.

That piece of paper contained a whole lot more information about everything you want. How your credit card company work, introductory ARP, what is the minimum payment, and how much can be your penalty in case of default and so on.

As a consumer, you should be well aware of there a term to avoid any meantime error.

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5. Unaware of introductory 0% APR

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Most credit card company comes with an introductory offer also called 0% APR (annual percentage rate) where you generally don’t have to pay any interest on purchasing or balance transfer for up to 18 months(or decided by the company).

0% APR can prove to be beneficial to you in many conditions such as in paying high-interest debt by balance transfer or large purchasing. Make the best use of introductory 0% APR and don’t commit the mistake of neglecting it.

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6. Applying for new credit cards too often

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I am sure you are not a credit card collector, or at least I hope so. Applying for a new credit card too often can be a little problematic for you. Having too many credit cards can seriously affect your credit score. Not only your credit card score but utilizing lots of credit card also affect your credit card report.

Every time you apply for a new credit card it reflects in your report. You also become suspicious to credit card providers which might affect you as a penalty. Avoid frequently using new cards and apply for it when you actually need it.

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7. Overuse Of your Credit Card

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Using your credit card for day to day activity, from buying groceries, to buy bread and butter from a credit card can seriously make your credit card sick. Everyday purchase from credit card always has a risk of overspending.

Limiting your card usage not only avoids the risk of overspending but also it can prove to be an effective method of saving some extra penny.

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8. Closing An Unused Credit Card without any Reason

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OLD IS GOLD. Older the credit card the more beneficial it can be for you. Keeping an old credit card account open can boost your credit score. About 10- 15% of your credit card score depends upon the longevity of your credit card account.

Keeping your old and unused credit card account open can help you increase your credit card score by lower your credit utilization ratio because older unused cards usually have lower credit utilization ratios.

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9. Taking Cash Advance

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Well, what is cash advance? Cash Advance is a process that allows you to withdraw some money against your credit card. It is the last mistake you would want to make with your credit card.

Not only it harms your credit score but cash advance is one of the most expensive transaction you will ever encounter. Cash advance generally charges 2-5% of the transaction fees plus you have to pay much higher interest in the repayment of it. It’s always better to avoid it rather than facing consequences.

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10. Not Maximizing Your Credit Benefits

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We often compare different credit cards in order to choose one with better and higher rewards. There are thousands of credit cards named reward cards that come with lots of benefits and rewards.

You can make the best use of your credit card by carefully using it, it generally comes with lots of reward points which can actually save you a lot more cash. Don’t commit a mistake by not utilizing this reward. Make the best use of your credit card.

THE UPSHOT

These are the summation of some of the biggest credit card mistakes people usually do but you should avoid them. Remember that credit card doesn’t mean you have freedom of using it till very last penny. Use it wisely.

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