Credit cards can be a blessing or an early grave if you aren’t careful. The stress that debt puts on one’s shoulder can make you feel like quicksand with no escape, so there is definitely plenty of responsibility involved with having one. To ensure that you are making all of the right credit card moves, try to ensure that you are avoiding any mistakes. Even the slightest mistake could end up costing your money, as credit score is the major factor in deciding not only your application approval or denial, but what terms and interest rate you are going to be paying going forward.
Overlooking the Due Date
Late payments are extremely damaging to not only your credit account, but your credit report as well. If you miss your due date you could get a late fee and interest rate hike as early as the next day, but when you hit thirty days is when your credit report is hit and your score is negatively impacted. Handling your own finances takes work, but much like anything else in life, you don’t want to be late, so it shouldn’t stop with your bills.
Closing Zero Balance Accounts
Depending on the size of the credit card balance, it may have taken years to pay off, which is an accomplishment in itself not having credit card debt any longer, so to give yourself a pat on the back you might opt to close the account to save from using going forward, but this could actually hurt your credit score taking away from your available balance. If you are looking to avoid using the card going forward you may just want to cut it up, and leave the account open to continue to build to your credit history.
Not Taking Advantage of Rewards
Credit cards are great when it comes to fraud protection, being able to book a hotel or rental car without worrying about a hold coming out of your bank account, but where credit cards really have the advantage are for rewards. These can be points that accumulate when you make purchases that you can redeem for gift cards, or they could even add up as dollars to receive a check back once a year. The down side is that the rewards keep adding up as you make purchases, so you want to make sure to not go overboard on spending, especially just for the rewards.
There’s nothing worse than paying interest rate. We may not be able to avoid it when it comes to large purchases such as a mortgage, or even an auto loan, but what we can control is spending within our means. Credit cards do give us the grace period to pay up by the next billing statement, but if you are spending too much and can’t make that full payment, then a balance will carry over and you will begin to pay interest, which depending on the balance, could take years to get out of.