Credit Card Mistakes You Could Be Making

Credit card used to get a bad rap years ago, giving the impression that you don’t actually have the money to make the purchases if using a credit card.  The truth is, credit cards can actually be financially smart to use, and as long as you are using responsibly, can actually provide many benefits, such as a grace period of paying back, protection against fraud, and not to mention the rewards.  While insurance can help you, credit cards can make sense as long as you are not making mistakes using.

Not Using the Right Card

While the interest rate is certainly important on the card, but the hope is that you would pay the full statement balance by the time the due date comes, so what actually could matter more is the rewards.  By making the purchases that you would be making anyways, you can earn rewards whether it’s airline miles, points that you can redeem for gift cards, or even a check with cash back.  By not using the right card, you could essentially be leaving free money on the table if you continue to use other cards.

Carrying Over a Balance

If you don’t pay your statement balance on or before the due date, you will begin to be charged interest, and from there can just be a downward spiral.  The deeper you go into debt the more interest gets charged and by making the monthly payments, little will go towards the balance.  In order to get out of debt you will need to free up extra money by reducing expenses such as going out to eat or cutting your cable cord, which could actually free up hundreds of dollars a month that you would be spending otherwise and use to put a dent into your debt balance.

Living Beyond Your Means

When it comes down to it, living within your means and not overspending is important when it comes to having more money coming in instead of going out, risking going into debt with continued spending.  A great way to keep spending under control is to create a budget, that way you can set aside a specific amount of funds in each category, from monthly bills, to spending on food, gas, and entertainment.  It will take some tweaking along the way to make sure that the right amounts are set up, but if you can stick with it, a budget can prove to be successful.

Making Only the Minimum Payments

When you get your credit card statement there is a minimum payment in order to satisfy your account in good standing, but it’s such a small amount that will do little to your balance, and could actually take you decades to pay off if you only make the minimum.  The best-case scenario would be to pay off the full statement balance by the due date so there isn’t a balance that is carried over, and therefore not charged any interest, and therefore keeping yourself out of debt going forward.