A lot of consumers these days take advantage of credit cards for their financial transactions. Some of them do not just own a single credit card, as they are equipped with multiple credit cards that they can swipe alternately for purchases and payments.
This way, there would be no need for them to bring a lot of cash as they are willing to deal with the interest rates from credit card companies. Even though there are already a lot of people who use credit cards, there are still people who do not know the proper ways of using it and are taking advantage of it the wrong way. Here are 5 things that you should completely avoid when using a credit card.
1. Not Paying in Full
There are credit card users who do not pay their billing statements in full just because they do not want to deal with loose change involved with it such as the centavos. What these people do not understand is that the unpaid amount will be charged with interest for the next month and this will accumulate on the statement balance on that same month.
The amount is not that much that is why it is often overlooked, but if you are trying to be thrifty, then you are actually wasting some dollars just because you don’t pay your credit card in full.
2. Not Aware of the Terms and Conditions of the Credit Card Provider
Most of the credit card companies work the same way but there could be minor differences in their terms and conditions, that could spell a major factor towards the way you use your credit card.
This is why it is important to completely understand the terms and conditions that your credit card company have before even taking advantage of their service. A lot of people have gone bankrupt due to this simple ignorance.
3. Not Using Your Credit Card at All
There are people who do not use their credit card at all in order to avoid paying for interest rates and other fees that go along with credit card usage. However, this is not a smart idea at all because if your credit card becomes inactive for months, then the credit provider could deem your account inactive and eventually close your credit line.
This may not seem like a big deal but this move will actually reflect into your credit report and will eventually affect your financial situation in the long run. Using credit has several benefits. You can get several cashback offers by using the credit, while the credit just sitting there is not going to benefit you in any way.
4. Maximizing your Credit Limit
Getting the most out of your credit card can also hurt your credit report. Even if you are capable of paying that amount, creditors would still think that you do not have cash ready and you’re only resorting towards credit for your finances.
The interest rate that would take its toll on your monthly balance would also be outstanding. If you are only smart enough the money that goes out to your interest rates should have already been considered as savings.
5. Using the Credit Card for Cash Advance
Most credit companies feed off users who use their credit cards for cash withdrawal. The interest rate this way is much higher compared when a credit card is swiped for goods and other transactions. Using your card much like a debit card is not advisable and is very risky. Only resort to this method in case of emergencies or else you would get used to this method and use it frequently which can take toll on your finances.
Using a credit card can be a form of privilege given that there are companies who offer cash back rewards when you keep on swiping them. However, monitoring your credit account along with your finances is more important just to make sure you are still on track when it comes to your credit card usage.
Featured photo credit: Lifestyle via blog.tugo.com
