Negosentro| Some Common Mistakes People Do With Credit Card |Credit cards provide huge benefits to the credit card holders provided they use it correctly. A credit card can help you to build credit and pay your expenses, but at the same time, if you misuse it then it can damage your credit score as well as it will cost you a lot of extra money. If you possess a credit card and miss a payment for a single month you will incur a substantial late fee and you will also damage your credit score. That is why it is essential to avoid making some common mistakes with a credit card. But every credit cardholders are not aware of those common mistakes. Hence in this article, we have come up with major credit card mistakes to avoid and save you from financial stress.
List of some common mistakes
The following are some common mistakes that you should always avoid to do if you are a credit card holder and want to save from some huge fines:
Carrying a balance month-to-month
One of the biggest mistakes that people usually do is carrying a balance month to month which ultimately hurts your credit score and also costs you extra money. When a person carries a balance in the credit card he has to bear a higher credit utilization rate and all your savings will lose if you have to pay high interest on the credit card.
Only making minimum payments
Though every credit card service provider gives its customer an option for paying a minimum amount, it is not advisable to pay just the minimum due when you can pay more than that. If you are not paying your complete credit card bill it will lead you to fall into debt and the unnecessary interest charge will be racked up on you.
Apart from that paying, a minimum amount can add months or years to take you to pay off the debt. Hence it is always advisable to have a payment plan before you are making any bigger expense and you should be always consistent with your payment and should always pay on time.
Missing a payment
If you miss a credit card payment or make a delay in payment it can hurt your credit score. For a 30 day missed payment you may expect a drop of 17 to 83 points and it can be as high as 27 to 133 for a missed payment of 90 days. Hence it is always advisable to opt for an autopay option for ensuring that payments are done on time. However, it may not be possible for you to go for an autopay option and in such a case, it is advisable to set a calendar reminder and also go for email notification.
Taking out a cash advance
Taking out a cash advance from the credit card is perhaps the greatest risk since the interest rate that you will incur in doping that is very high and there is no grace period as well. Credit cards often come with risks of falling into a debt trap. Here are some tips to save yourself from making some of the common credit card mistakes.