Top 10 Credit Card Mistakes
April 23, 2010
Many of us who have a credit card have never been taught the do’s and dont’s of owning a credit card. Some of it might seem like common sense but you would be surprised at what many people don’t really know about credit card ownership. Here are the top 10 mistakes you need to look out for if you own a credit card.
1. Making minimum only payments.
Making the minimum payment on your credit card not only increases the amount of time it takes to pay off your credit card balance, it also increases the amount of interest you pay on your credit card. Increasing your credit card payment helps you pay off your balance sooner and at a lower cost.
2. Paying late.
Paying the minimum on your credit card not only increases the amount of time it takes to pay off your credit card balance, it also increases the amount of interest you pay on your credit card.
3. Loaning your credit card.
When you loan your credit card to someone else, you’ve no control over the purchases they make. In the end, you’re responsible for paying the bill, even if the person who borrowed your credit card doesn’t.
4. Ignoring your credit card billing statement.
If you don’t open your credit card billing statement, you risk missing your payment due date. You could also miss important announcements about changes to your credit card terms.
5. Letting your credit card get charged-off.
A charge-off is one of the worst things to happen to your credit report and your credit score. The charge-off listing will remain on your credit report for seven years and could effect your ability to get credit cards and loans in the future.
6. Waiting to report your lost or stolen credit card.
The longer it takes you to report a lost or stolen credit card, the longer the thief has to charge up your account. If you report your missing credit card before any fraudulent charges are made, you’ll have no liability for the charges.
7. Maxing out your credit card.
Charging your credit card balance beyond 30% of your credit limit is perilous to your credit score. Getting close to your credit limit puts you at risk for over-the-limit fees and penalty interest rate your credit card charges when you exceed your credit limit.
8. Closing your credit card out of anger.
Canceling your credit card account will seldom get you anywhere with your credit card issuer. It will nearly always cost you credit score points as you drive your credit utilization up. Leave credit card accounts open until you’re sure closing the card won’t injured your credit score.
9. Applying for too many credit cards at once.
Every time you apply for a new credit card, you knock points off your credit score. If you begin applying for several credit cards within a short period of time, you might notice the denials are more frequent as lenders start getting suspicious about the sudden onslaught of credit card applications. Apply for new credit cards one at a time on an as-needed basis.
10. Not knowing your credit card terms.
Knowing how your credit card company handles late payments makes you more prone to pay your credit card bill on time. Knowing your credit card terms give you more control over your credit card costs. You know how you should and should not use your credit card based on how your creditor will respond to your actions.
What’s Your Worst Credit Card Mistake?See what mistakes other readers have made. Tell us the worst credit card mistake you’ve ever made!
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