A lot of people live thinking that having a credit card will irreversibly damage their financial health and credit score. However, as things are rarely just black and white, owning a credit card comes with its advantages and with its less advantageous features.
What are the credit card mistakes you really, really need to avoid if you want good financial health? We have gathered some of the most important tips to help you with this – so read on if you want to find out more.
Having too many credit cards
One credit card is OK – one too many is definitely not. Opening and closing credit card accounts when you’re tempted by the different reward systems credit card companies offer is not a solution in any way. On the contrary, it can hurt your credit score.
Even more, keeping more than one credit card can also hurt your credit score – and it can make it more troublesome to actually manage your finances correctly.
Not paying off every month
Although credit card companies allow customers to make a minimum payment every month, this is not necessarily great in any way. In fact, it will only make you end up in more debt because these monthly minimums come with huge interest rates – and whatever’s left to pay will be charged with the same interest rate as well.
Make sure you pay your credit card bill before the due date, so that the money is in the account exactly when you need it to be – not even one day later, as even that can add extra-fees to your bill.
Not checking your bill
Although it can be a tedious process to thoroughly check your credit card bill, it is very important that you do it. Human error could lead to an extra charge on your credit card bill and it is crucial that you dispute this in due time to make sure you will not be left charged with a sum of money you don’t actually own. Yes, it does take some time to check every single transaction on your credit card – but it can and SHOULD be done.
Use it to live beyond your means
Having a credit card doesn’t mean you get to have free money. They may give you a limit that’s higher than your monthly salary – but that doesn’t mean you should actually use it. Sure, that shiny new TV looks awesome now and you can definitely walk away paying it with your credit card – but are you really ready to pay the bill in full at the end of the next month?
Probably not – and this is why it is really important to know how to live within your means. It’s always better to SAVE money, rather than take loans – so get down to business and make a financial plan that will not get you in MORE debt, but actually help you live better without breaking the bank.