Avoid Making These Credit Card Use Mistakes
Being aware of the impact credit card use has on an individual’s credit scores may be an incentive to develop the right skills for credit card use that will benefit your credit score instead of hurting it. However, creditors don’t usually offer credit card assistance programs. Once you sign up for a credit card, you’re on your way to either helping or hurting your credit scores.
There are many benefits and advantages to credit card use. For instance, they are a convenience when paying at restaurants, when traveling, and purchasing goods and services online and at the mall. Plus, credit card companies also give you great rewards on a point system scale for using the card frequently to make purchases because they benefit from transaction traffic. Another advantage of using credit cards is that it gives your credit score a facelift. Here are some credit card use assistance tips to help you navigate through credit card finances.
1) Avoid Credit Card Mania
So you’ve got credit card offers bursting out of your mailbox every day offering low to zero interest rate or APR for x number of months. You’re on a credit card high, and you say to yourself, “the more, the better.” Wrong! Wait! Don’t fall into the trap! You don’t want to be that guy in the movies that takes out his wallet, and two feet of credit card cases fall out. Flaunting too many credit cards may negatively affect your credit score. Don’t forget credit cards are not a reflection of your income and they come with strings attached like annual fees and interest rates.
If you are already experiencing heavy credit card debt (a consequence of having too many outstanding credit card balances), chances are you’ll need all the credit card assistance you can get to help you thwart the downfall.
2) Sign Up Bonuses And Earning Reward Points Sound Great, But
Credit card companies offer sign up bonuses and credit card points for using your credit card to purchase just about anything. The temptation to accumulate lots of points to receive the rewards, however, may induce overspending or spending beyond your means. Sure, your rewards may be great, but you have to keep on spending to receive them. See the relationship? The more points you earn, the more you’ll be tempted to spend. That weekend getaway trip to the Bahamas sure sounds great when you can charge it all away. Just make sure it’s within your means. At the end of the day, it’s money you owe, and it will collect interest if you don’t pay.
3) No Budget No Vision
Living within your means will get you more productive faster than charging up a lifestyle that can’t be backed up by your income. Creating and sticking to a budget will not only let you have more control over your expenditures, but it will also help you reach your goals faster. By creating a budget, you are setting goals according to your vision. If your financial goal is to pay off your mortgage or retire at a beach condo, your best bet is to start early. Plan your vacations within your budget and use your credit card to earn those points while on your planned spree, but don’t go overboard. When you get back to reality you’ll be thankful you exercised caution and prudence while having a great time. Remember that the best things in life like friendship and peace cannot be charged.
4) Pay Attention To Credit Card Terms And Conditions
Luring customers with low-interest rates for a period is very successful in getting new customers to sign up for credit cards. While the offers are in effect credit card customer forget about the changes that are coming and may get into deep trouble. Charging up a storm on new credit offers you cannot refuse is an easy way to wake up one day and realize that your 0% interest rate on the $2000 armoire your wife wanted is now at the 24% rate and you must come up with the cash to avoid the burn.
Whether it’s 3 months or a year, these introductory rates will stop, and the new rates will sneak up behind you when you least expected it if you’re not careful. One way to avoid this is to create a reminder on your favorite calendar tool. The best practice, however, is to pay off your balance every month. You see, balances on your credit card will be charged with retroactive interests from the date of purchase. Bang! Your credit card bill just tripled. Read the small print on credit card terms and conditions. It may not be as exciting as reading your Twitter mentions, but it helps you live a debt-free life with good credit scores. Read all the sections well and call your creditor with any questions you might have. Don’t let credit card debt creep up behind you.
5) Minimum Payments Will Put You Deeper Into Debt
Paying off your debt is the only way to avoid interest rate charges on your credit card balance each month. Paying the minimum due on your credit card account each month will compound the interest and increase the principal. Your principal will not lower any at all for years. How long will it take you to pay $1,000 at 24% rate if you only make 4%the minimum payment due and how much will you have paid at the end of the term? According to interest.com, it will take you 83 months, and you’ll end up paying $775 more dollars. You have the option to make the minimum payment due each month which is a percentage of what your balance is. Calculate your pay off time at the minimum amount due using your data, and you’ll want to pay the balance off asap.
6) Avoiding Late Payment Penalties
If you already know that you’re not going to be able to pay off the entire balance on your credit card one month, by all means, use the minimum payment due option. However, as soon as you can, go back and make that payment to bring your balance to 0. You’ll have more leverage for negotiation in the case when you can’t pay even the minimum due. It happens! Things come up. However, being a responsible credit card user means you will always keep communication going between you and your credit in cases when you’re not able to make a payment. Credit card company representatives are willing to help people who help themselves. They will allow you to skip a payment without penalizing you on the first occurrence. They can even help you settle when you’re in dire straits and can’t help but default on your loan. Avoid these consequences by staying actively involved with your credit card monthly statements and your credit card company representatives.
7) Avoid Exceeding Your Credit Limits
The penalties associated with going over your credit card limits make it undesirable
to exceed your credit limit. This is one of those boxes in the credit card terms and conditions brochure most people skip over. The initial thought is that it won’t happen to you. However, it’s easy to exceed your limits when you’re not keeping up with your balance statement watch month. Patience is the one way to achievement. Learn to wait for the right time to purchase your next big item or splurge during a shopping spree. You can click here to get Credit Consultation.
Chris Mcdonald has been the lead news writer at complete connection. His passion for helping people in all aspects of online marketing flows through in the expert industry coverage he provides. Chris is also an author of tech blog Area19delegate. He likes spending his time with family, studying martial arts and plucking fat bass guitar strings.