Getting a credit card can be difficult, so it is imperative to take care of it. Quite simply, taking care of it means that you are making the necessary payments on time. Not being able to do this will land you in hot water – paying late can result to you in paying high interest rates. While paying the principal amount makes sense, paying a high interest does not.
Having a credit card gives you power – but remember, nothing in life comes for free. For now, get reading and make sure to retain what you have read – it can save you from committing any of these mistakes in the future.
Living The Free Money Mentality
Once again, nothing in life comes for free. Though a credit card allows you to spend how much ever you can (depending on your credit limit), you will need to make the necessary payments at the end of the month. With that said, make sure to spend only to the extent to which you can pay. While you have the option to not pay in full, it will simply be added on to the next bill – it is an additional burden.
Do not make the mistake of missing payments. Develop a habit of keeping receipts and taking note of your expenditures on the card. However, this is useless if you do not make sure to pay on time. If you are forgetful, then set an alert for payment on your smartphone or set up automatic payments through your online banking application.
Maxing Out Your Credit Card
While you are given a certain limit to spend, try your best to not max it out. Along with payment history, your credit score is also determined by your credit utilization. To maintain a good credit score, try to utilize only 30% of your total credit card limit. The lesser you use your card, the higher your credit score.
Applying For More Credit
Applying for a new credit card shows that your current one may not be enough. While some may simply want another one for emergency purposes, there are others who apply for it because they have maxed out their present one. Whatever the reason may be, though, applying for a new card decreases your credit score by 2 to 5 points, depending on how worthy you are of credit.
Misunderstanding Introductory Rates
There is such a thing called as introductory rates for credit cards, and this rate is most helpful when using balance transfer. However, it is important that you look into the regular rates once the teaser is over (6 to 18 months after receiving the card) as these particular loans can go up to 18 to 20 percent – an absurdly high and unusual rate.
Not Finding The Best Rate
This is known as “rate shopping”. While some credit cards may look nicer than others, they may not have the best interest rate. However, if you are going through some trouble financially, you may not be offered a card with a favorable interest rate. For this reason, look around till you can find a credit card that can offer you the best interest rate from the worst lot.
Not Reading The Fine Print
Ignoring or completely disregarding the fine print can cost you a lot. The fine print contains all the data that you must know regarding the credit card. While the letters may be printed in an extremely small font, you need to make it a point to read it so that you are aware of what is coming. Better to be safe than sorry since you are in a binding agreement with the credit card company.
Not Knowing Your Credit Score
Do not make the mistake of applying for a credit card without knowing what your credit score is. If you are applying for multiple credit cards at one time, you are essentially lowering your credit score. Also, you may be applying for a credit card that you are actually not qualified for, only to be denied later.
Visit applyforcredit.cards to learn more about credit card mistakes you should avoid. It will also be perfect to learn about wise spending via http://www.casb.uscourts.gov/html/care/Top%2010%20Financial%20Tips.pdf.
The biggest temptation when you have a credit card is to spend without limits. Learn what mistakes to avoid when using your credit cards at applyforcredit.cards.