How many times have you heard or been given this advice; use your credit cards wisely? If you’re an adult older than 25, you’ve probably heard that hundreds of times but, frankly, probably still aren’t heeding the advice either. Below are a number of bad habits that many people have when it comes to credit cards and, if you are one of them, curbing that bad habit is a definite necessity. Enjoy.
Bad credit card habit #1: Charging everything mindlessly. Many consumers foolishly believe that, if they use a credit card when they make a purchase, it “doesn’t count”. Many consumers these days have 4, 5, 6 or more credit cards and more than a few have 10 or more. In fact, some people will continue to spend on credit as long as credit companies continue to give them credit cards, setting up a vicious cycle that can take years to pay off.
Bad credit card habit #2: Paying only the minimum. Let’s be honest, if you have a month or two where things like an emergency car repair or illness has put a big dent in your budget, paying the minimum on your cards for one or two months isn’t going to make a big difference over many years. Some consumers get into the habit of simply paying the minimum always however, which is a surefire way of wasting hundreds of money. Not only that but, in some cases, the amount of debt can build to such a high amount that it’s almost impossible to pay off.
Bad credit card habit #3: Purchasing nonessential items on revolving credit. let’s say that you have an emergency car repair and don’t have the cash to pay for it. Putting that on your credit card only makes sense because, obviously, you need your car to get to work and make a living. On the other hand, if you have a closet full of clothing or a perfectly functioning smart phone, do you really need more clothing or the newest smartphone on the market? Many consumers make their financial situation much worse by purchasing nonessential items on credit rather than waiting until they actually have the cash available (or not purchasing the nonessential items at all).
Bad credit card habit #4: Taking out cash advances on your credit card. This is possibly one of the worst mistakes that you can make with credit cards. In fact, possibly the only thing worse than using your credit card to purchase something that you can’t afford is to use it to borrow cash. Not only will you have to pay interest on that cash, in most cases, a transaction fee also, upwards of 5%.
Bad credit card habit #5: Keeping too many credit cards. Sure, having 1 or 2 credit cards, and maybe even 3, isn’t too bad. Having 10 or more not only means that you probably are spending way too much on credit but also makes it much more difficult to keep track of those cards, keep track of payments and keep up with payments as well.
If any of the bad habits above is a habit of yours, kicking that bad habit(s) is one of the best ways to get your finances back in shape, increase your credit score and, most importantly, stop wasting money on interest and fees.