Credit cards are a convenient way to make purchases and pay for things you can’t afford in cash. And while they have some advantages, they also come with many fees and penalties that can add up over time. If you want to make the most of your credit card but avoid these common mistakes, keep reading!
Don’t Miss Payments
Missed payments can lead to late fees, higher interest rates, and a lower credit score. All of these mean you will pay more money in the long run.
If you’re having trouble making payments on time or paying off your balance in full each month, it’s time to make a change. Try transferring some of your debt onto another card with a 0% intro period or give Student Loan.
Taking Cash Advances for Unnecessary Purchases
Cash advances are a loan taken out against your credit card. They’re often used for emergencies, but there are other reasons you might want to take a cash advance. For example, taking out a short-term loan could be an easy solution if you’re about to go on vacation and don’t have enough money in the bank for your trip expenses.
That said, it’s important to know that cash advances have higher interest rates than regular credit cards (and sometimes even higher than payday loans). The typical cash advance interest rate is around 27%. Cash advances also have lower limits than regular credit cards; most people can only borrow up to $300 once before needing approval from their bank or card issuer.
Only Making Minimum Repayments
Making only the minimum repayment on your credit card is one of the most common mistakes people make when managing debt.
The truth is that making just the minimum monthly repayment will not help you pay down your balance; it can do more harm than good if you’re trying to do so.
When you only make the minimum payment each month and nothing else, all you’re doing is keeping up with interest charges—which means that over time, your debt will grow instead of shrink.
Overlook The Fees
When you’re looking at credit cards, be sure to consider the fees as well. These can be hidden in other areas, like the typical credit card interest rate or annual fee. As per the professionals at SoFi, “The interest rate for your credit card could be higher or lower than this average depending on factors such as your credit profile given how credit cards work.” So it’s important to look closely at all these details before deciding.
Apply For Too Many Cards
The more credit cards you have, your finances can become more complicated. Each new card has a different set of terms and conditions that you must understand. You also need to keep track of all of your bills, due dates and balances.
If one card isn’t paying off as well as another or if it has a higher annual fee, transferring your balance may be necessary or even advisable. But this is easier said than done: when it comes time to pay off your debt on multiple cards at once (a process known as “global consolidation”), there’s no guarantee that all of the card issuers will accept each other’s payments—and worse yet is having two different monthly dues rolling in at once for services rendered by two different companies!
Most credit cards come with fees, and it’s important to know what they are
Credit card fees can be confusing. There are many types of credit card fees, some more common than others. Credit card fees are a significant part of the cost of using a credit card and should be considered when comparing offers from different lenders. Avoiding unnecessary fees is one way to maximize your return on investment when using a credit card.
Being credit card savvy can sometimes feel like a lot of work, but it’s worth it. By avoiding these five common mistakes, you’ll be able to create a better financial future for yourself and your family—and have fun while doing so!
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