Many millenials, I believe, own a card or two but, I don’t think that most of them know the responsibilities of having it. Credit cards can be a pro and also a con to our finances, but it all depends on how we use it. Below are the mistakes you should avoid making as a credit card holder.
Mistake #1: Owning more than what you can pay for.
I guess you’re wondering how many cards should you have. I know how tempting it is seeing credit card offers frequently showing up everywhere, in the mall or on the computer screen. Who doesn’t want low-interest rates and no-fee balance transfers? I believe most people are interested on those kind of pitch. And before you know it, you could end up with six, eight credit cards – or even thirteen just like that! You will get tempted to use it, not knowing that you’ve already maxed out all of it and when reality hits, you will come to the point where in you need to take a brake and do desperate measures like cutting up your cards, bagging it to the freezer, or even joining a financial seminar like Rebecca Bloomwood did.
You can own as much as thirteen cards but with a little common sense. Don’t wait until you start getting your monthly statement of accounts just to realize you’ve overlimit your credit by making unrestrained purchases. With right planning and safety precaution, you can put your credit cards to good use without going into extreme debt. Make sure to only have what you can pay for.
Mistake #2: Not planning credit card expenses.
Have you ever monitored your expenses? Owning a credit card is a responsibility. Like what I’ve said earlier, it comes with right planning and safety precaution. Make sure to review your monthly budget every now and then to see whether you are making unplanned purchases and spending more than what you can afford. Always set goals of using your credit card just for specific things, like purchasing an appliances and availing it on 0% installment. When doing nonobligatory shopping for holidays or special occasions, always have in mind the amount that you want to spend to avoid buying expensive and unnecessary items.
Mistake #3: Bringing all your credit cards everyday.
When out and about on daily errands, avoid bringing all your credit cards if possible, so you won’t get tempted using it and just stick to cash. According to studies, people often pay with credit card and tend to spend more than planned, mostly for non-essential purchases. Leaving your cards at home and bringing only one card, enough for your emergency purchase, will result to fewer charged expenses. It can also help to maintain lower balances which is equivalent to smaller payments with possibly less interest.
Mistake #4: Failing to make payments automatically.
Some fail to make payments on time which leaves bills unpaid, or worse, accumulate debt amounts on unused or ignored credit cards. So it’s better to may automatic payment arrangements for your convenience.
Mistake #5: Not Tracking Credit Card Records
Don’t be too comfortable whenever you use your card. Not all transactions are right. There might be mistakes or fraudulent transactions. You must learn to tract and reconcile your transaction receipts, statements and bills to help you check your records because if you don’t, it may lead to poor credit score, or result in paying more that you should.
So, how many mistakes have you done? I hope this article enlightened you and saved you from getting broke like Rebecca Bloomwood. It’s never too late to correct those mistakes.
Most people thought that owning a credit card is a bad idea. Well, let me tell you that it’s not and I’ll explain it to you on my next blog post.