Perhaps the most important thing to understand about credit cards is that they’re potentially harmful, at least as it relates to your credit and financial welfare. When handled well and responsibly they can be an asset and help you build financial strength.
When used irresponsibly they can result in rate hikes and damage to your credit. Thousands of people make costly credit card mistakes daily.
Not Reading the Terms and Conditions. Don’t sign anything you haven’t read. Sure, it can be time consuming, but if you can’t manage to read the terms you shouldn’t get the card. Give special consideration to future increases in rates and the kind of fees you can be charged.
Missing Payment Deadlines. This is an especially easy mistake to make, but is easily avoidable if you set up some sort of automatic payment. This is not only because you may simply forget to send in money, but also because these companies have a deadline for receiving the money, which is different from a deadline for sending (so a mailed item which arrives late costs you).
Missing a Payment Paying late is a small mistake that can result in big penalties. You will almost always be charged a late payment fee, and your late payment will effect your credit rating making it less likely that you'll be able to get low interest credit cards; plus your debt is automatically thrown onto the very worst rate the company offers.
When repaying debt you should always post your payment a long time before the due date (at least a week). If you’ve left it to the last minute, phone up and try to pay that way.
Hitting the Limits on Your Cards. Whatever you do don't abuse cash advances and credit card checks. For one it looks bad and implies that you have no other sources from which you can spend. It's better to tap approximately half of the credit limit regularly and pay it back, then wait for the company
to increase your limit (which they quickly will), and then you’ll get that extra
money without the negatives of a maxed-out card.
Having Too Many Cards. Some people have lots of cards, but not necessarily the right one for their lifestyle and spending habits, which can result in debt problems. Don’t be one of these people; limit yourself to a maximum of three cards at a time – especially since any more starts to make you look over-committed in your credit report, which could cause you to be turned down for a bigger loan.
Choosing Based on Rewards. Though strong rewards can be very tempting, it is never, ever worth getting a higher-interest card for them. For example, a possible cash reward will almost never be more than you would pay in extra interest. If you run any balance, all rewards do is pay you with a portion of your own money.
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