Major Mistakes To Avoid On Credit Cards Part2

In our previous post on major mistakes to avoid on credit cards, I outlined that not knowing your interest rate, withdrawing money with your card at a ATM machine, paying the minimum payment required and giving your card to someone “you know” can be fatal mistakes. Today, we are looking at 3 other major mistakes to avoid on credit cards.

Use your credit card as a permanent financing tool

Many people think that credit cards can be used to finance goods, travels and other purchases. This could actually be good if you think you can pay off you credit cards within 12 months and that you benefit from a low APR credit card at the same time.

However, this “ideal” situation doesn’t happen often. If you finance your purchase through a credit card, be aware that you will be a high interest rate from 10% to 20% (it can go up to 30% with some known store credit cards). Therefore, you might pay your initial purchase twice or three times if you count all the interest charged on your credit cards. You are definitely better off with a line of credit or a personal loan if you have a major purchase to finance.

Not knowing when you will pay off your credit card

Some individuals run a balance on their credit card indefinitely. If you are that type of person, you should take your credit card statements from the last 12 months and calculate how much interest you paid on them.

I personally used my credit cards for everything. However, I know exactly when I’ll pay it off: at the end of the month! If you have a big balance on your credit card, you might want to consolidate your debts through a personal loan or a mortgage. The important thing is to know when you will be done paying your owing balance.

Not knowing when your credit card bill is coming due

This is crucial if you want to keep a stellar credit bureau. If you don’t look at your statement carefully, you may be late in your payments. Worst, you may be late regularly.

The best thing is to keep your payment due date (it is always around the same day every month) on a calendar. Therefore, if you move or simply loose your statement (you would be amazed to see what kids can do when they are left alone 2 minutes with the mail ), you will have a reminder. You always have the option of calling your credit card company to verify when you payment is due.

So if you avoid those major mistakes, you will definitely keep a good credit score and pay less charges on your credit cards

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