7 Tips to Avoid These Costly Credit Card Mistakes

Posted on Monday 19 June 2017

Credit cards can be friend or foe to your wallet or pocketbook, it all depends on how you utilize them and of course, manage them. So, what can you do to make certain you aren't accidentally engaging in improper credit card habits? There are ways to avoid all of those spine-crushing fees--specifically if you start making your monthly payment on time. And if you pay more than the minimum monthly payment you'll be even better off. It seems that no matter how many times we read about critical credit card mistakes, they just keep happening. There's no way to know for sure if it is just due to forgetfulness, or the inability to stay on task and meet goals.

In this respect, we've put together a helpful list to possibly prevent new credit cardholders from falling into the same tragedy so many others have and ensure that you achieve your financial goals. Let's see what we've come up with. And just remember, managing your credit card activity better can free up more money for you! It will ensure you have some kind of safety net without stress. Most certainly, you won't need to look for high-interest loans when you better manage your spending.

Don't Let These Haunt Your FICO Score For Years

If you can avoid these costly mistakes you can protect your financial future. Unfortunately, your FICO score has an impact on many areas of normal, everyday life. While it isn't like this everywhere in the world—it is in Canada and the US. Because of this importance, you have to stay vigilant. You can repair poor credit when you think smart too! Just don't get same day loans to pay off existing debt. It doesn't work that way.

  • Don't view your credit card as if it is free money: Nothing is free in this world and viewing a credit card as an easier way to have access to money is not a great way to go financially. You have to pay it back, and you have to do it on time. Stay on budget, and don't treat a credit card as a blank check for your entertainment.
  • Don't live beyond your means and make senseless purchases: It can be easy to pick up that jacket you've been wanting all week, but can you really afford it? Even the very wealthy know that staying on budget is critical. You have to be able to pay for what you charge, and too many get carried away. If you plan on paying for your purchases at the end of the month you'll be fine. If you don't and you overspend, then you have a real problem.
  • Don't max out your credit cards: When you overspend, you can easily max out your credit card. This is bad for your credit history and bad for your pocketbook. It shows you're living on credit and not on income. Don't do it! It is also expensive to pay back and you never know when you might not be able to pay. If you also find that you don't have a great credit score, you might want to learn how to improve bad credit.
  • Don't apply for more credit for all the wrong reasons: Only apply for additional credit if you're doing it to minimize current credit card costs. If you have an offer where fees are less, then it might be wise to transfer a balance over. Just don't do this to spend more money.
  • Don't ignore your credit score: When you're applying for credit cards, don't just do so without having all relevant information. You need to be aware of your credit score status, so that you may know what offers suit you best. Applying to just anything can lower your credit score as you get too many inquiries on your credit report in a short time.
  • Don't ignore the fine print on an offer: It is sad to apply for credit, receive an offer and then dive in without adequate assessment. You need to read the fine print to be aware of the fees and any rewards that might be available. Too many Canadians get overly excited for an offer and just take it. This is a big mistake. Take your time and know the creditor!
  • Of course, you should never miss payments: Missing one payment isn't a sin, but if you are constantly late on your payments and always behind on what you owe, then this is bad. Creditors will not favour someone who can't stay on top of their debt. Don't get in over your head and always meet your payments like clockwork.

If you follow these tips then having a couple of credit cards can be great for a consumer. Stay on a budget and they can work even better. The more you use your credit and pay it off in full, the better your credit report will look. Go and overspend and not pay back in a timely manner and your credit report will suffer. Be smart and take advantage of a couple of credit cards to prove your creditworthiness—not bury yourself in debt!