5 Most Costly Mistakes You Can Commit With Credit Cards
Credit cards can be a blessing to many people; however, to make the maximum out of them, you need to be aware of how to use the card and what to avoid. We’ve put together a list of 5 of the most costly mistakes you can make with credit cards. Try to avoid committing these mistakes at any cost:
- Buying Everything With Credit Card: Buying all of your everyday stuff with your credit cards is one of the most common, dangerous and most costly mistakes many people make. You have to understand that having and using a credit card means that you are borrowing money. Do not fool yourself into believing that you can borrow money for your everyday shopping. No! Always make cash payment or debit card payment a priority if you want to avoid those costly mistakes associated with credit cards.
- Paying Minimum Amount On Monthly Credit Card Bills: Second among the most costly mistakes you can incur with you credit card is making minimum monthly payments against your credit card bills. If you are practicing this, you are headed for a disaster. Stop it right away and make complete payment because the minimum payments you are making hardly cover the interest. In other words, the payments you are making do not cover the amount you owe your credit card issuers. While your credit card company would be happy about this, you would hit a disaster.
- Making Late Payments: Third on the list of most costly mistakes you can commit with your credit cards is making late payments. Not only does late payments hurt your credit score, but also you will also not be able to borrow money in future. This occurs because when you make a late payment, your creditor reports you to the credit agencies.
- Signing Up For More Credit Cards: When you sign up for many credit cards, you are committing one of the most costly mistakes. Increasing the number of your credit cards will push you in a debt and damage your credit score, which means that no one would offer you credit in future, and you would be spending the rest of your life struggling to get out of debt.
- High Credit Limit: If you are having a high credit limit, it can turn into a problem. You may go about purchasing everything with your credit card thinking that you have a high credit limit; however, at the end of the day, you’ll have to pay the amount along with interest and chances are you’ll be in debt.