When used responsibly, a credit card can be a fantastic asset. For example, you can earn cashback and rewards with every use. Unfortunately, incorrectly using your credit card can lead to serious financial trouble. Here are five common mistakes to avoid.
1.) ONLY PAYING THE MINIMUM BALANCE
You’re under no obligation to pay off your credit card in full. Therefore, it can be tempting to make the minimum payment, especially if you’re experiencing financial difficulty. However, because credit cards have such high-interest rates, it’s better to pay as much of your bill as you’re able to each month.
2.) USING YOUR CREDIT CARD FOR DAILY EXPENSES
Avoid using your credit card for everyday expenses if you want to make it easy to pay off your credit card in full at the end of each month. Using your credit card to buy your daily coffee, pay for your groceries and fill up on gas can quickly add up. This can cause a lot of stress when your monthly statement arrives.
3.) USING TOO MUCH OF YOUR AVAILABLE CREDIT
Even if you usually pay off your entire credit card bill each month, it’s not a good idea to regularly use more than 75% of your available credit. Maxing out your cards can make it harder to pay off your debt if something happens that puts you in a position of financial difficulty.
4.) MAKING LATE PAYMENTS
It’s important to always respect the due date on your credit card bills. If you don’t pay your bill on time, you’ll have to pay interest and may be subject to additional fees that could hurt your wallet.
5.) PAYING IT OFF TOO QUICKLY
Although it’s never good to pay off your credit card too late, you also shouldn’t pay it off too early. For example, you shouldn’t use your credit card to eat out and then pay it off as soon as you get home. If you want to build your credit rating, wait until your bill arrives, and then pay it off before the due date.
If you need expert advice about rebuilding your credit, the expert credit counsellors at D. & A. MacLeod Company Ltd. can help.
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