6 Costly Credit Card Mistakes You Should Stop Making

6 Costly Credit Card Mistakes You Should Stop Making
It’s very easy to make mistakes with credit cards. It’s often the case that the agreement between you and the credit card company is shrouded in a veil of legal and financial jargon that’s often mystifying. How can you adopt “best practices” for credit card management when you can’t even understand the basic rules?

Relax. We’ve got you covered.

Here are 6 costly credit card mistakes you should stop making.

1. Not Reading the Fine Print

Although you might not understand everything in a credit card agreement, you’ll likely understand some of it. Be sure to actually read the agreement so that you can be certain you’re entering a deal that’s in your best interest.

For example, one of the credit card finders you used might have led you to a card with a great interest rate. However, you might find that if you transfer a balance to a new credit card, the interest rate on the amount transferred is higher than the rate for new purchases. That kind of information is part of the devil that’s in the details. Make sure you go over your agreement carefully before signing it.

2. Stop Using It

Believe it or not, it’s a financial venial sin to not use a credit card that you have in your possession. Credit card companies aren’t happy with customers who don’t use their credit cards every now and then. If you’ve got a card in your wallet that hasn’t seen any action lately, consider making a purchase with it the next time that you’re at the mall. Then, pay off the balance as soon as you get the bill.

3. Making Late Payments

This point is fairly obvious. You should always pay your credit card bills on time. Failure to do so means that you could incur late fees, a spike in your interest rates, and be reported to one or more credit bureaus for a delinquent payment. That will hurt your ability to get a loan in the future.

4. Only Making the Minimum Payment

Those wily folks at your credit card company know how to get as much money out of you as possible. They send you a bill every month with a minimum payment that consists of interest and just a wee bit of the principal. If you pay just the minimum, it could take you years longer than you expected to pay down the balance to $0.

Fortunately, you don’t have to fall into that trap. Instead of paying just the minimum, add the monthly interest charge to the minimum payment and pay that much. Then, you’ll be taking a nice chunk off of the principal and pay the balance down much more quickly.

5. Maxing Out Your Credit Cards

It’s easy to confuse having a high credit limit and actually having the money to afford paying for everything you charge. While you want to take advantage of what life has so much to offer with the convenience of using a credit card, you do want to have some money available for the proverbial rainy day. If you can’t resist the urge to spend money with a credit card, consider getting a prepaid credit card that will force you to live within your means.

6. Taking Cash Advances

Although many credit cards allow you to take cash advances, you’ll find that the interest rate on those advances is about as close to usury as is legal. As a rule of thumb, cash advances from credit cards just aren’t worth the expense. Avoid them.

Now that you know about some of the costly credit card mistakes you can make, here’s a good piece of advice: don’t make them.

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