Credit cards come with responsibility. Of course, you know that but sometimes, material things get overwhelming that you forget. The temptation of using too much credit card is great but you have to aspire to be a responsible user. Credit cards have many perks but if it is mishandled, you will find yourself paying countless debts for a very long time.
You have to learn the importance of personal finance to stay out of debt and trouble. Personal finance is a discipline of managing finances from earning, spending, investing, saving and paying off debts. It is crucial that you know the value of personal finance because it plays a huge factor in reaching your life goals. Basically, it can help create wealth over a period of time. How can you create wealth if you are in an unbreakable cycle of debts?
The good news is that it is not yet too late to remedy your credit card debts. While it is true that bad habits are easy to fall into, you can still do something to get out of it. Remember that bad credit habits can damage your credit score and can lead to many financial problems in the future. You have to replace bad habits right away. Here are some bad credit card habits and how you can turn it around:
Not checking credit card statements
Credit card statements are stressful and boring to read that is why many people do not even open it. Reading it is also time-consuming. No matter the case, it is important that you read your statements every month because you can learn many things from it like for instance unauthorized credit card charges or even billing errors. Instead of just checking the balance and payment, you have to keep track of your account activity by reviewing and verifying it. Do not underestimate the importance of monitoring your accounts. Do not just pay it, read it as well.
Making purchases without checking your available credit
Do not assume that your available credit is the same as the last time you checked it. If you make purchases without checking your available credit, there may be some penalties involved depending on your card issuer. If you do not want to incur such, you have to check first your available credit before making purchases. To check, you can just call or check smartphone app to confirm your available credit. If you want to keep your credit scores in good shape, you should use less than 30% of the limit. Remember that the lower your balances are, the more scores you can benefit.
Always using a credit card instead of a debit card
Using credit card always is tempting because of the rewards and installation. However, you have to make it a point to use your debit cards for everyday purchases like gas, clothing, and groceries. If you use a credit card for these things, make sure that you have concrete plans of paying it every month.
Paying the minimum
Paying just the minimum will take a toll on your personal finances at the end of the day. It is easy to pay minimum but you have to realise that you are not making a progress. Your credit card bills will only add up even if you pay the minimum. Think about the interest. Even if you have very low or 0% interest rate, there is a chance that you are paying more in finance charges. As much as you can, send full payment for every billing period. Upon purchasing, you need to have a solid plan to pay off the credit card debts and not take it as it comes.
Paying credit card late
There is no excuse to pay late. Today, there are many platforms or methods that you can use to conveniently pay. You can even pay in advance. If you habitually pay late, it will affect your record. If paying late is a habit, you need a system to turn this around. The simplest thing to do is to create an alarm for when you are due. You can also create a reminder or calendar – whatever works for you. Paying your credit card on time can make a difference at the end of the day.
Requesting cash advances
You have to know that cash advance is the most expensive type of all credit card transactions. This is the reason why many issuers call users all the time offering for this service. You are overwhelmed thinking that it can help you but in truth, it will only make matters worse. Remember that credit card should never be the source of your cash. If you are used to requesting cash advances, it is time to stop it immediately. The prudent thing to do is to take a step back and figure out ways to cut back on your spending so you have more cash from your wages and you won’t rely on your credit cards for easy cash.
Applying for credit cards you do not need
There are many promotions these days like low-interest rate and sign up bonuses to entice more card users. Even if you already have enough credit cards, this is not something you should miss. This kind of thinking will really affect your personal finances. Just know that new credit card hurts your credit score and it creates more opportunity to get into debts. When they offer, be strong to say no.
Buying things that you cannot afford
This is the worst credit card habit. Credit card presents an opportunity to buy things that you cannot afford by creating an installment plan. Installment plans are helpful but only if you can afford to pay it monthly for long periods of time. If you cannot afford something, wait until you can then purchase it. Before you swipe, assess your finances first.
Being a responsible credit card user takes effort and finesse but surely it will be to your benefit in the long run. To stay away from debt, you need to cement your financial position and before swiping, assess your situation first.