Credit cards can be great for a number of reasons — from helping you build credit to making it easier to manage a monthly budget. However, if you don’t know what you’re doing, there can be some pitfalls that come along with relying on plastic. Here are some of the more common credit card mistakes.
Late Payments Rolling
If you miss a credit card payment, things can snowball quickly. One missed payment becomes another, and the late fees and interest charges pile up. Before you know it, you’re waist deep in debt and your credit score is on the decline. Avoid this disaster by making all your payments on time.
You should thoroughly research credit cards so you’re fully taking advantage of all rewards offered. Cards reward you for spending in certain categories. So if you tend to spend a lot on groceries, find a card that offers nice rewards for grocery spending. If your spending is more varied and you’re still interested in cash rewards — as opposed to say airline points or miles — find one that offers a consistently high percentage back.
The Overspend Temptation
The fact that credit cards are sometimes referred to as “free money” is incredibly dangerous. It’s borrowed money, not free. Every penny you spend needs to be repaid at the end of the month. It’s vital that you remember that so you avoid overspending and busting your budget.
Bumping your credit card balance past 30 percent of your limit can negatively impact your credit score. And as Yahoo reports, getting close to your limit means you could go over-the-limit, and thus incur fees. Keep your balance low and you’ll be in a much better spot.