The use of credit cards has undoubtedly granted us financial freedom. These cards give us the benefits of discounted shopping prices, rewards, and cashless transactions. All these perks can be thoroughly enjoyed as long as you use them prudently.
However, it can be easy to fall into bad habits. Bad credit card habits can adversely affect your credit score. It can usher you into debt, resulting in many different financial complications that jeopardize your long-term goals and stability.
If you’re someone who wants to be financially responsible, here are a few bad credit card habits that you need to avoid to maintain a healthy credit score.
All of us have busy days, right? When it gets hectic, it can be very easy to forget to pay a loan or the bills, especially if you have several credit accounts. However, keep in mind that missing payments, even a day or two, usually results in late fees.
Although it will not initially harm your credit score, if you miss a payment for at least thirty days, your credit will be adversely impacted. It can get worse if you default for ninety days.
According to Experian, late or missed payments will stay on your credit report for seven years. You can avoid this mistake by setting up automatic payments or reminders to ensure that you never miss a payment.
Not Reviewing Your Entire Credit Card Statement
With various bills arriving every month, reviewing each one of them can be tedious and boring. But some advantages come from reading your entire credit card statements, such as detecting billing errors or unauthorized credit card charges.
That said, do not just scroll through your mail and check your payment information and balance. It is essential to review your entire credit card statements to make sure that your account activity is accurate. If you notice any erroneous reports on your statement, report them right away to avoid being held responsible for something you never did.
Not Using Your Debit Card
Another bad credit habit most people make is using their credit cards instead of their debit cards. Unless you are using it to collect rewards and repay your monthly credit card balance, you should not use your credit card more than your debit.
Remember that your debit card is your quickest access to the money you pull out for everyday purchases, such as clothing, gas, groceries, and more. It must be a necessary purchase if you opt to use your credit card. Consider making a definite plan for repaying the charges that you have.
Transferring Balances To Evade Payments
When it comes to repaying a high-interest rate credit card balance, balance transfer promotions can be the perfect strategy. However, if you are always chasing this kind of promotion to steer clear from making payments on your card, you are practicing a bad habit that could endanger you over time.
Balance transfers usually charge fees that’ll raise your overall credit card balance if you default with the transfer. If you are using the card to make purchases with a balance transfer promotion, you will be worsening the problem.
Keep in mind that the issuers create the rules and can decide to shut down your strategy. This means issuers can make sure that your available balance will not be enough for the balance transfer, your application for the promotion will be denied, or you will not be eligible for the promotional rate.
Purchasing Expensive Things
Buying things you cannot afford is perhaps the worst habit that anyone can probably have, just right next to regularly making late payments. This habit is how you can quickly get yourself into debt. That said, if you want to buy something but cannot afford to do so, it is best to wait until you have the money.
The pleasure you get from buying things now will not be worth it when you have to grapple with the debt you made after purchasing those items. Additionally, before you make a purchase, make sure that you can afford it. Otherwise, be disciplined enough to restrain yourself for the sake of peace of mind later on.
Applying For New Credit Cards
Sign up bonuses, and low-interest-rate promotions are undoubtedly tempting and inviting. It is true that even though you already have credit cards, you can still sign up for whatever promotion is offered.
However, doing this can potentially harm your credit score and lead you into debt. Maybe you can handle your credit cards well right now. But wait several months later, and you’ll surely find yourself tearing your hair out in frustration.
By avoiding these bad credit habits, you can keep the good credit score you have worked hard to establish. There’s nothing wrong with getting yourself a credit card as long as you don’t get carried away with it. Practice good habits, such as making timely payments, consolidating credit cards, not exceeding your limit, and more to maintain and improve your credit score.