You do not have to be an expert to know that if you pay your debts late (or just do not pay them) at some point your credit card history and personal finances will be affected.
However, there are other errors or bad practices that you may be committing that you do not know and that only with a few minor adjustments you can correct. If you are looking for wealth you must change these habits.
Here we tell you 10 errors about your credit card
1. Not having a credit card
The age of your credit history is a determining factor when it comes to taking a loan, so the longer you have been part of the banking system you will become a more reliable option when it comes to providing a loan for housing, automobile, or free investment.
If you do not have a credit history yet, start as soon as possible, a good way to start is by getting a credit card and learning to manage it. Continue reading: When an SME must finance themselves even if they do not need it?
2. Have several inactive cards
A wallet full of credit cards is useless. In case you did not know, the fact of having several cards at the same time can affect your credit quality since due to the quota you have you can get into debt in a much easier way and in greater quantity. The recommendation is to have a maximum of two.
3. Cancel a card after having paid it
Although having a credit divided among several credit cards can affect you, as we just explained, canceling them after paying their entirety is not the most recommended option.
This is because your percentage of use, which is how much you have used of your credit line, will increase, affecting your credit quality (since you will continue to consume the same, but with a lower quota).
The best thing you can do is pay off that debt and control your desire to spend, with this, you will improve your use.
Additionally, your credit quality is influenced by the time you have with the card, so if you cancel a card with a good track record, your quality will be strongly punished.
4. Pay only the “Minimum Payment”
Paying your monthly payment in full will not affect your credit quality, do not worry, however, this will not allow you to reduce your debt levels. Try to pay a small additional amount to your minimum payment, this effort will reduce your negative balance and pay less interest in the future.
Imagine the following: Let’s pretend that you have a credit card with a debt of 1,500 dollars with an annual interest rate of 18%. With a minimum monthly payment of $ 37, it would take you 159 months to pay off all the debt, at full cost or interest, of $ 1,760.
If you were to pay 10 additional dollars monthly (47 dollars), it would take you only 44 months (almost 10 years less!) And with an interest of 557 dollars, that is, 1,203 dollars saved. If you have 10 dollars that you have on a monthly basis, you should invest them in your credit card.
5. Deceive with introductory interest rates
That you are not going to pay interest, or that you are going to pay very low ones, are simple incentives for you to apply for a new card; Normally these promotions last six months, maximum one year, and from that moment the crisis comes when the rates begin to rise.
Nobody is going to tell you not to take a card with a lower interest rate than you already have, but you must be careful with the dates and the conditions that come, as people tend to forget this information and end up paying fees much higher.
It is recommended that you have a reminder in your fridge, cell phone, desk … anywhere, but that you remember that on such date the introductory fees of your new card expire. Also keep in mind, before making large purchases, if you are able to pay the entire debt before the initial rates expire.
6. Fall in promotions
Earn those miles, that you return the money, not pay certain taxes … we know that all these promotions can be tempting and even valuable. The important thing is that you read and understand the fine print; If you have a card with a high-interest rate, that promotion may no longer be interesting.
Before acquiring a new credit card, research and analyze well your reasons why you are getting them, and hopefully the indicated and not a simple promotion.
7. Exceeding the amount of the card
Not only is it embarrassing to be told that the funds are insufficient, but the fees that the bank can charge you for that overdraft are astronomical.
Check your transactions and account statements constantly, so you will avoid making this mistake and you will not have to face that uncomfortable situation when the waiter arrives and tells you that the card does not have enough money.
8. Take any rate
It can be extremely expensive not to analyze the different options you have before taking a credit card. If you want to have a credit quality and healthy personal finances you should look for the best possible interest rate, you should check how they are charging you, if it is an annual, anticipated, expired, monthly rate, analyze everything.
Those offers that arrive in the mail are not the most beneficial and interesting. Compare all your options, and if you only have one, do not take it.
9. Prefer credit over cash
If you do it for the convenience of plastic use the debit cards for your daily purchases such as food, gasoline, cravings … (just do not spend more than you have in your bank account). Avoid making these purchases with your credit card since you will end up paying them for a long time and for a higher value due to the interest rate.
Reserve the credit card for purchases of large amounts such as furniture, televisions, and other expenses that you remember easily. If you find yourself living between payment and payment, from your credit card, it is time to review your expenses and start cutting them.
10. Take advances in your card
Regardless of what you do please do not make advances on your credit card, unless it is really an emergency. The banks usually charge you these advances with much higher rates, they do not give you miles, and above all, they defer it to the maximum of installments.
If you’re really in trouble, ask your boss for an advance, or a friend or relative who lends you money without having to incur these charges.
“Blogcollector” also invited you to read this article: How to get professional credit for your business?