Credit Card Mistakes You Can’t Afford to Make!

| July 1, 2017 | 0 Comments

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Credit cards are awesome. Sure, not everyone needs them, and certainly there are many people out there who have got themselves into trouble through the use of one. But if you use it wisely, it can actually help you out financially in pretty profound ways. But you need to make sure you’re not making the sort of mistakes that are quite common among credit card owners. Here are the mistakes to avoid!

Getting crazy amounts of credit cards

I’m not saying you should only have one credit card. Heck, it’s often recommended that you have more than one. But “more than one” doesn’t mean “as many as your bank will let you have”. Because a second card is so much easier to get than your first, a lot of people become tempted to get a third, a fourth, a fifth, a sixth. More credit cards seems to suggest that you’ve got good ‘creditworthiness’, and can even carry some social prestige with its suggestion of affluence. But more credit cards means more debt; and, in most cases, having more than two isn’t really necessary.

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Borrowing money to pay for credit

Working with direct payday lenders can be useful in several scenarios, but paying off credit card debt isn’t one of them. Taking out credit in order to pay for credit isn’t a smart move. You’re basically replacing one debt with another, which isn’t just pointless – it can also put you in a trickier situation than the one you were in before. Save borrowing for things you really need, because the interest rates on loans are likely to cost you more than non-payment of credit card debt will. (That is, as long as you’re not missing months worth of payments!)

Forgetting about money as a tangible thing

There are many out there who don’t bother to check their bank account on a regular basis. They don’t pay that much attention to how much they’re spending; if their reserves run low, it’s usually just before payday anyway. Credit and debit cards have helped make this quite a widespread mindset. Money no longer seems like a tangible thing, of which you have a limited amount. You don’t have a wad of cash that decreases in weight as you use it. Money is just a number on a screen; a very fluid, almost abstract thing. This mindset can make you a bit more flippant about your money than you should be.

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Only paying back the minimum

When you’re browsing credit card options, the ones that offer the lower minimum repayments each month are often the most appealing. You shouldn’t use this as the only criterion by which you choose a credit card, but choosing one with a low minimum monthly payment can certainly be a good move. However, you should really only use this to your advantage if you find yourself struggling financially in a given month. You should pay back more that the minimum each month, because the minimum only tends to cover interest and finance fees, as opposed to a portion of everything you owe. This can actually increase debt in the long term.

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Category: Credit Cards

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