Dangerous Mistakes You Are Making With Your Credit Card

Credit cards are very helpful if you use them well, but they can go terribly wrong, if you make some of the mistakes you will be warned against in this article. If you have bad credit, you should know there are credit cards on the market designed to help you build your credit rating. But before you do that, let’s just have a look at the dangerous mistakes you are probably making with your credit cards and how to avoid them.

credit card mistakesMistake #1. Using the Credit Card to Make Everyday Purchases

One of the easiest ways to build massive credit card debt is to use the credit card for even the smallest purchases such as food, clothing and gas. You shouldn’t stop using cash just because you’ve got a credit card with you. Use cash or debit card wherever possible, especially for minor purchases. Especially if you got the credit card to help you over come your current bad credit status. Bad credit credit cards tend to have a higher interest rate then good credit cards. If you use your card unnecessarily and can’t pay it off at the end of the month. You will incur a lot of interest debt. Use your credit cards for their convenience, safety and reliability. Of course, you may make all your online purchases using the credit card. But always remember your goal is to be able to pay it off in full at the end of the month.

Mistake #2. Making Purchases Just to Earn Rewards

Rewards cards offer several great advantages, such as getting a 3% rebate on an airline ticket. But there is often a temptation to overspend to take advantage of the perks offered, which could cause you to spend more than what was intended. That’s why it is important to ask yourself why you’re buying a certain item and whether you really need it. If you can’t really justify what you’re buying, it’s perhaps better to avoid doing so. The extra points just aren’t worth the extra debt in the long run!

Mistake #3. Failing to Read the Fine Print

One of the most basic errors people make is not to read the fine print on their credit cards, not clearly understanding the credit card agreement. For example, you may have heard of the advantages of balance transfers from a high interest credit card to one with low interest, but may have neglected to read the fine print about the balance transfer fee – which means you actually end up owing more on it. That’s why it is important not to agree to sign on the credit card’s terms immediately while applying for one. Are you sure you truly understand what you’re signing for? Have you gone through every little detail?

Mistake #4. Not Paying Your Credit Card Bills on Time

It is very important to pay the credit card bills on time, especially if you are trying to use the credit card to rebuild your credit! Not paying the bills on time really hurts as you will not only have to pay late payment fees, and have it reported to the credit bureaus. But some credit card companies will increase your interest rate if you pay late even once! If you’re really not able to make the monthly payment on time, whether it is because of a medical emergency or some other reason, it is important to inform the credit card provider well in advance and let them know about your situation. In most cases, if your reasons are genuine, credit card companies waive the late fees if informed in advance about the late payment.

Mistake #5. Making Only Minimum Payments

It is never a good idea only to make a minimum payment on the credit card every time. This is because not only does this increase the amount of time you will require to pay off your debt, you will also find yourself paying much more in interest charges. That’s why you should pay off as much of the balance as possible on each credit card every month. In a perfect world, you should be able to pay off the entire balance each month. But if that’s not practical, you should aim to pay off at least 35-50% of the balance each month. It might be hard at first, but it gets easier and you will be able to make even bigger payments once you do this 3 or 4 months in succession.

Mistake #6. Excessively Using the Credit Card

It’s never a smart thing to use your credit cards excessively, as that only hurts your credit score. Ideally you should limit your utilization rate under 30%. Make smart decisions about what you need and what you don’t. Be responsible with how you use your credit card.

Mistake #7. Closing the Credit Card

You should never close a credit card that still has a balance or makes up a big part of your credit history. Closing credit cards could negatively impact your credit score. Doing so would also increase your utilization rate and might actually lead to unintended consequences as far as your credit rating is concerned. Don’t close a credit card unless you really have to.

Elizabeth Roberts

Elizabeth Roberts

Liz Roberts and her team are continuously providing information to people who are ready to repair their credit and improve their credit score. Also NewHorizon.org team strives to empower the homebased and small business owners by bringing information that can help them to manage and grow their businesses. Let our 24+ years of business finance experience help you to get the financing you need! CONTACT US if need financing for your business.

2 Comments
  1. The tips were useful and enlightening I have been paying more than the minimum on my two cards I would like to take out a used car but I am afraid I will be denied by my credit union for the loan even though I will be putting money down

    • Find a car loan that gives loan to people with bad credit history. Also ask a friend or a family with good credit score to be your co-signer. That will give you a big chance to be approved. Good luck!

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NHBS Inc © 2022

NewHorizon.org is an independent, advertising supported website. The owner of the site may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website. NewHorizon.org has not reviewed all available credit card offers in the marketplace.

Privacy Policy Terms of Use

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