Mistakes To Avoid When Taking Out A Credit Card
Getting a credit card is something which many people do as a way of improving their credit score while also making life that little bit easier. It allows us to spend money on items during the month which we would normally not be able to afford until payday. It can take a huge amount of stress off us and is a great way to keep on track with our money.
There are loads of different types of credit cards you can get: there are the best reward credit cards, cash back credit cards, travel credit cards and a ton more to suit every need, however, there are some mistakes we all need to avoid when taking out a credit card for the first time.
1 Making minimum only payments
Never stick to the minimum payment which the credit card company offers you. Although you might think it is great that you can spend less each month to keep your card, the payments at the end will hike up and so will your interest rates. Make sure that before you take a credit out, you can afford to make the maximum payment each month. Staying on track is one of the most crucial things when it comes to having a credit card.
2 Paying late
By paying the minimum amount on your credit card, you are increasing the amount of time it takes you to pay off your balance. It will also increase the amount of interest you need to pay back too. The longer it takes you to pay back your credit card balance, the worse it will get until you cannot manage the payments and this will become a debt.
3 Loaning your credit card
Never loan your credit card to someone else. You will have no control over the purchase that they make with the card and you will be the one who is responsible for paying back the final bill, because it is your name on the card. This means that if they are late to pay you back the money, you will need to fork out for the costs.
4 Ignoring your billing statement
It is tempting when you get your billing statement through it just toss it to one side in the living room, however you need to open the letter and actually take the time to look at what you owe. If you don’t take the time to look at your billing statement you are much more likely to forget to pay off the bill and this can affect your credit score and land you in debt.
5 A charge-off
A charge-off listing will remain in your credit report for seven years and can have a detrimental affect on your credit score. It takes a total of six months of missing payment for you to gain a charge-off, and it is the worst thing that can happen to you when you have a credit card.
6 Not reporting your card stolen or lost
If you take your time to report your credit card lost or stolen, this tacks up the amount of a time a thief can be spending money on the card and racking up charges.