Credit cards can seem dangerous to those that don’t understand how to use them properly. Using credit cards improperly can land you in debt that will take years to get out of. Keep your credit score healthy by avoiding the following mistakes:
1. Getting Too Many Credit Cards
As a new credit card owner, it can be tempting to apply for card after card. While this will give you access to new lines of credit, it also opens the door to more and more debt. With more credit cards, you may be tempted to buy more than you can afford.
Grand Canyon Advisors warn that credit cards aren’t a type of supplemental income. If you don’t have the cash to cover whatever it is you hope to use your cards for, don’t apply for another card.
2. Misunderstanding Introductory Rates
Introductory rates are the fine print that will help you understand how to protect your credit score when using credit cards. These introductory rates often trick new credit card users into taking on high-interest debt. Once the introductory period for your new credit card expires, you’ll be charged the interest that’s accumulated from the first day of your purchase.
If you are going to use a credit card, be sure to read the introductory rates carefully. This will help you make sure that you’re able to pay off your bill in full by the time the introductory rate is over.
3. Failing to Read the Fine Print
In addition to the information regarding the introductory rates, be sure to read the rest of the fine print. This information will explain the truth about balance transfer fees in addition to other offer limitations. Though some credit cards are initially attractive, the fine print may be enough to dissuade you from using it.
Such credit cards often charge a certain percentage for users to transfer their balance. After this initial period, the interest rate and transfer fees increase significantly.
4. Using Credit for the Wrong Reasons
Though credit cards can be used to pay for almost anything, they shouldn’t be used indiscriminately. The best way to build a healthy credit score is to use your credit cards as intentionally as possible. If you’re hoping to fund a shopping spree or go on an expensive vacation by putting all your expenses on your credit card, this isn’t a great idea.
Grand Canyon Advisors suggest only using credit cards to make purchases you can afford. This way, you’ll be able to pay off your balance and reap the benefits of a healthy credit score and any reward points you incur at this time.
5. Making Minimum Payments
Though making the minimum payments on time will help you avoid late fees, this practice isn’t doing any favors for your credit score. With high-interest rates, you’ll find that you’re digging yourself further into debt by paying the minimum monthly. If you’re going to use a credit card, make sure to pay off the balance in full each month to avoid accruing interest at all and to successfully improve your credit score.
Though many credit card users find themselves making serious mistakes with debt, this doesn’t have to be the case for you. Keep this guide in mind as you learn how to make your credit card work for you