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Watch a Few Credit Card Mistakes You Could Be Making

There may be a bad reputation when it comes to credit cards, giving the perception that using one means that you don’t actually have the sufficient funds to make the purchase, and kicking the can down the road, for example.  While sure that may be true for some, leading down a path of credit card debt, but for those that can use them efficiently, credit cards can actually make good sense to use, whether it gives fraud protection, a grace period to pay back, or what is even better, the rewards that come along with.  If you can use correctly and avoid credit card mistakes, then using a credit card can be a regular, financially smart occurrence.

Not Using the Right Cards

When it comes to deciding on which credit card you need, it comes down to a couple things of major importance, which is the interest rate, which you should be paying off the balance anyways and not carry over to the next month, and the rewards, which you can earn by making the normal purchases you would be making anyways, in the form of airline miles, points to redeem for gift cards, or even better, a check in the form of cash back once a year.  Not taking advantage of rewards is essentially leaving free money on the table.

Not Using Rewards that Benefit Your Lifestyle

As mentioned, rewards are a reason why you could argue that you could actually use a credit card for all purchases, as long as you can stay within your spending budget.  Once you get used to seeing the rewards add up, that may entice you to make more and more purchases, but the problem in doing that is if you continue to charge up and are unable to pay off the full statement balance by the due date, the amount of interest you are paying could be more than the rewards you would be getting in return, so would not even be worth it.

Not Using Store Cards if You Shop There Often

If you frequent the same stores, whether it’s Best Buy, or a department store for clothes, there can be extra incentives to get a store card to use that to make purchases.  You can get bonus percent off the price by signing up, not to mention getting exclusive coupons and discounts by using your card for purchases as well.  Just keep in mind, that store credit cards typically have high interest rates, so you would be stuck with say a 16% interest rate if you are unable to pay off the balance by the statement due date.

Continuing to Pay High Interest Rates on Debt

Depending on the balance on your card and the interest rate attached, the monthly payments could be quite high and a large portion of that would go to cover the interest charged for the month.  Continuing to go along that path would take years of chipping away at the balance to get it paid off, along with plenty of money wasted on interest.  If you are able to transfer the balance to another card with a 0% interest promo rate, you can start having all of your monthly payments going towards the balance.  There will be fees with transferring a balance over, but they will still be small in comparison to what you would be charged in interest on the other card.

Ignoring Credit Score

With so much fraud these days it’s good to check your credit report at least once a year to ensure that all accounts and info are accurate, but to take it a step further, credit score should be looked at as well.  These days you can find your credit score on your monthly credit card statements, so you can continue to watch every month to ensure they’re trending in the right direction.  The better the credit score, the lower the interest rates you can have on large expenses such as the mortgage, loans, and credit cards.

Making Only the Minimum Payments

While sure, making sure at least the minimum payment is made will satisfy to make sure your account is in good standing, it will do little to chip away at the balance and could take decades to finally getting out of that day on that path.  In order to really stretching out and paying even more interest, the higher payments you can afford to make each month until the balance is gone, will allow you to free up extra money to start looking at best roth ira providers in order to build up an emergency fund or increase contributions to your retirement account.

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