Owning a credit card is one of the greatest assets that you can have. However, the slightest mistake can cost you quite a penny. You can get a high-interest rate charge, incur a late fee, close the credit card or worst-case scenario tarnishes your credit score.
Nonetheless, did you know that the same credit card, when used correctly, can assist you in building a credit history? You can have a magnificent chance to save money, build credit as well as enjoy the awesome perks. You ought to avoid common credit card mistakes to make the most of your credit card. These fatal mistakes are as follows and ways to prevent them.
- Carrying a balance month to month
One of the highest credit score fallacies is that when one is taking a balance, the credit card enhances one’s credit. It turns out that when you carry a balance month to month, it costs you money, and worst of all, it hurts your credit score.
When you carry a balance, you will have a high credit utilization rate, which isn’t right. It can also get expensive due to the interest rate charges. Thus, it would be best if you avoid this at all costs. You can use a cash-back card to save cash on your daily spending. However, the savings won’t be worth much if you’re using it to pay interest rates alone.
- Making minimum payments
You will not know that credit card issuers make it possible to make minimum payments. However, before you take this route, you ought to know that when you make a minimum payment, you are only increasing the time it takes to pay off the credit card balance. You are also increasing the interest rate amount to be paid on the credit card.
Avoid paying the minimum payment if you can. You can instead choose to increase your monthly credit card payment as it’ll assist you in paying off the balance sooner and at a low cost.
- Missing a payment
Missed payment or late payment can adversely affect your credit score. You ought to strive and make your payments on time. It would be best if you devise a mechanism where you can remember all the due dates so that you don’t forget.
If you fall behind more than thirty days, your credit score is in jeopardy. You can incur a high-interest rate penalty or a drop in your credit score. Thus, you ought to be vigilant by setting an email notification to remind you of payment.
- Applying for new credit cards often
Did you know that each time you apply for a credit card, there’s a further inquiry that appears on your credit report? If you’ve more queries within a short period, you’ll look like a significant risk to lenders. You can visit here to get the right tips to get the ideal credit card to suit your needs so that you can jump from one card to another.
Getting a credit card is all well and good. However, before you apply for one, you must know the terms. Visit here to learn all matters to do with credit cards so that you can make informed choices. Most importantly, strive to avoid credit card mistakes.