A credit card is a valuable tool; an instrument to get a product or service that you don’t want to spend money on now but would rather pay off later. With credit cards comes great reward but also great responsibility. Avoid these common mistakes that some card holders make.
Introductory: Many people are lured into credit arrangements by these introductory or “teaser” rates. “0% interest for 90 days!” Then for three months you charge and charge and charge. Until that fourth month when you haven’t paid off your huge balance and all the interest comes due. Don’t be fooled by intro rates; especially with huge credit limits; you’re still taking on debt.
Minimum Payments: Another one of the classic credit card mistakes is making only the minimum payments. This is doubly troublesome when you are trying to get out of credit card debt. Only making the minimum payment it will take far longer than if you apply yourself and pay as much down as possible.
Overextension: If you take on too much credit card debt, that’s really bad. You may think that you can manipulate your way around paying too high an interest rate and switching your credit cards around or something ridiculous. But too much credit is too much credit. A good question to ask is, “Could I pay down my entire credit balance this month?” If your answer is “no way” then you probably have overextended yourself.
Exceeding: You were given a credit limit for a reason; so you don’t go over that limit. However many credit cards will let you “slip” over that amount. If you do go over that limit though you will likely be assessed a fee. You will also have a much bigger minimum payment the next month. So if you find yourself; month after month; paying down the minimum amount on your card, then running up the charges and exceeding whatever that minimum amount is, that’s a bad situation. If that describes you then your spending has landed you in credit excess and you need to stop.
Overwhelmed: Getting overwhelmed is pretty easy; especially if you have taken this five step trip with me to overextended credit land. Getting overwhelmed can lead you to not paying your bills, avoiding their calls, and other evasion. Don’t do that. Face your challenges. Talk to your credit card and find out how to fix what’s broken.