A credit card is a necessity for most people. A lot of commerce happens online and in other situations that require the use of a credit card. Although a credit card is useful, it can also cause huge problems if you mismanage it. Here are some of the top credit card mistakes that you should avoid.
Being Misled by Introductory Rates
A lot of credit cards offer very attractive introductory rates for people who open up new credit card accounts. These rates can sometimes be as low as 0% for a year or more. However, these rates will always eventually go up. If a person racks up a lot of charges on their card during the low interest introductory period, they run into big problems when the period ends. If you’ve accumulated a lot of unpaid charges at this point, the regular rates can be financially ruinous. Be sure to know exactly what your rates will be before you get a credit card.
Getting Too Many Credit CardsMistakes
The truth is that most people do not need more than one credit card. However, it can be very tempting to accumulate a bunch of cards for different reasons. Some people want a higher monthly credit limit. Others get them because different store cards offer different benefits. You should avoid having multiple credit cards if at all possible. Each new card presents another opportunity to fall deeper into debt. Even if you have enough self control to avoid getting credit card debt, having multiple cards can hurt your chances of getting a loan in the future as banks can see your potential to suddenly fall into a lot of debt.
Not Shopping Around
Nobody plans to accumulate credit card debt, but sometimes it happens. If it does happen, you don’t want to get stuck losing a ton of money to a high APR. Before you apply for any credit card, you should shop around to find the best rate possible. Your regular APR will be greatly affected by your credit rating. Some companies will offer better rates for people of different credit scores on different cards. Finding the best one that’s available to you will greatly lessen your chances of accumulating serious debt.
Exceeding Your Credit Limit
You should use your credit card only when absolutely necessary. Every credit card has a monthly limit on how much you can charge. If you exceed this limit, you may incur a fine. Furthermore, exceeding this limit can be very damaging to your credit score. If your credit card company offers online accounting, be sure to check your account regularly to see how much credit you have left for the month. If you’re getting close to your limit, try not to charge anything at all until you make another payment on your card.
Credit cards can be very useful if you are sure to use them responsibly. If you are prudent about avoiding any of these common credit card mistakes, you will not have to worry about falling into debt.