Bad credit card habits not only cause chaos with your credit score; over time, they will result in you accumulating more debt than you can afford to comfortably repay. Your long-term financial plans can also be derailed completely, which is why it’s essential that you eliminate these bad habits right away.
Failing to Inspect Credit Card Statements
While it may seem like nothing short of the most boring chore on earth to check your credit card statements thoroughly, the truth is that perusing each line item on them can help prevent any fraudulent purchases from being added without your knowledge.
If you notice any charges that you haven’t made, you’ll need to notify your credit card provider immediately so that the necessary actions can be taken to reverse them. Another aspect you should always check is your credit limit – over time, your bank can change this without notifying you and this can result in some hefty fees being charged if you exceed your limit.
Only Paying Minimum Amounts
Credit card companies provide a convenient feature in that they only require you to repay a small amount of your outstanding balance each month. While this may seem handy, you will not ever be able to repay your card in full if only minimum require amounts are being applied. In addition, you’ll be paying hefty amounts of interest on the outstanding balance.
When the time comes to make repayments, always ensure that you pay as much as you possibly can against the outstanding balance. Over time, you’ll save thousands of dollars in interest.
Taking out a cash advance is most likely the costliest type of credit card transaction. Not only will you pay a higher interest rate on the amount you’ve withdrawn; the grace period for interest being charged with normal transactions is usually voided and an additional cash advance fee will normally be charged as well.
Purchasing Unnecessary items
This is another bad habit that should be stopped immediately because it results in you accumulating debt that you might not be able to repay at a later stage.
If there are items you want, but cannot afford to pay for in full, it’s best to save up instead of placing these purchases on a credit card. You will feel a tremendous sense of satisfaction in knowing that you own the item from the start instead of only truly owning it after repaying your credit card balance.
Making Late Payments
These days, it’s possible to schedule payments so that they are sent to your credit card provider on time each month – meaning that there is literally no excuse for making late payments anymore.
Late payments not only affect your credit score; over time, additional penalty fees and interest will be applied to your credit card as well. Again, this will result in you wasting money on unnecessary late payment fees.
Exercising good credit card habits such as never carrying a balance until such time as interest is charged and ensuring that repayments are always made on time will go a long way in helping to build an excellent credit score – while allowing you to keep more of your hard earned cash because of not paying interest.Continue reading