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14 Major credit card mistakes that can lower your score

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By: sanderspatricia29
on 2nd May,2017

Credit card mistakes can be costly. Here are the 14 major credit card mistakes you must avoid by all means.
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As per the financial experts, most credit card holders think that credit is free money. However, this isn’t true. It’s a type of loan and a credit card user is liable to repay the loan with due installments of principal and interest.

Here are some other major credit card mistakes you should avoid

1 Making only the minimum monthly payments

Making the minimum monthly payment is a common credit card mistake. If you make only the minimum monthly payments, then it’ll just increase the time to repay the outstanding amount.

The longer you take the time to pay off your debt, the more you’ll have to pay on the interest.

So, it’s better to stay at a safe distance from the credit card debt hole.

2 Making late payments

Payment history is a crucial part of your credit record. If you make late payments, then it can create a negative impact on your credit score. Moreover, a credit card company will charge you late fees and penalties for making late payments.

3 Crossing the credit limit

Crossing the credit card limit is another mistake that can create a major problem in the future. Reckless spending and crossing the credit limit will hurt your credit score.

4 Using credit card for daily items

You should use cash instead of a credit card for making regular purchases. Otherwise, it’ll be difficult for you to maintain your monthly budget. You should try to keep your budget under control unless you're in an emergency situation.

5 Using credit cards to pay the medical bills

Medical bills are expensive for an uninsured person. If you don’t have medical insurance, then you should try other options instead of paying the bills with a credit card. You can negotiate for easy payment plans with the hospital authority to whom you owe money.

Don't add your bills by incurring credit card interest for paying huge medical bills.

6 Avoiding credit card statements

Remember, avoiding your expected bill payment dates won’t make them disappear. Using a credit card without making the payment each month will add interest charges and a premium on the money that you’ve acquired.

Make sure you check all the statements in your mailbox.

Thus, you’ll be able to point out any error and fraudulent activity as well.

7 Choosing a wrong credit card

Choose the right credit card for you.

Don’t get distracted by reward cards like most people.

Remember, reward cards aren’t always the right choice for everyone. If the person has good credit and the ability to pay the full bill each month, then he/she can choose a reward credit card.

8 Sending credit card information via online channels

Unsecured emails and other online channels aren’t safe to transfer credit card information. Your information can be stolen. Text messages and secured accounts are safe to transfer information related to your credit cards.

9 Not negotiating for discounts

You should negotiate with the credit card company for lower interest rate. This may not work every time. Still, you should try your best to reduce the interest rate. If you’re lucky enough, this small adjustment will make a big difference in your financial health.

It’s a type of loan and a credit card user is liable to repay the loan with due installments of principal and interest. - It’s a type of loan and a credit card user is liable to repay it with due installments of principal and interest.

The longer you take the time to pay off your credit card debt, the more you’ll have to pay on the interest.

10 Thinking credit cards as bad wolves

Agreed. Credit cards come with a high-interest rate. But, it would be wrong to consider them as wolves. It all depends on how you use credit cards. Plus, credit cards give you a chance to build credit. Remember, without a good credit history, it would be hard for you to qualify for an auto loan or mortgage.

11 Making cash withdrawals

Don’t make cash withdrawals since you have to pay back the amount at the end of the month. Plus, you have to pay higher interest on cash advances than on purchases.

12 Allowing your credit cards to get charged-off

Usually, credit cards are charged-off when you don’t make any payments for 6 months. A charged-off account will bring down your credit score plus it will be there on your credit report for 7 years. This may stop you from qualifying for credit cards and loans in the future.

If your accounts have been charged-off, try to settle them as soon as possible.

13 Not reporting your lost credit card

Not reporting your lost credit card is a big financial mistake since the thief will get more time to make fraudulent charges. Plus, you might be held accountable for the charges made by the fraudster.

You won’t be accountable for the charges if you inform the credit card company about the theft before any fraudulent charges are made. So, if you lose your credit card, report it as soon as possible.

14 Not having an idea about credit terms

How much do you have to pay if you miss your payments? When can your creditor increase interest rate? You can get these answers after reading the credit card terms and conditions. You’ll know the dos and don'ts of using your credit card and the steps that the creditor can take.

Bottom line

Credit cards are good to overcome from any financial emergency, but if you start to misuse your plastics, you may get a terrible effect on your financial life. You must always try to manage your credit cards in a right way to avoid debt troubles.

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