3 Credit Card Mistakes to Avoid
Credit is an extremely important part of our everyday lives, but when used incorrectly, it can become a heavy burden and bury you in debt.
Luckily, a little knowledge can go a long way when it comes to using credit cards in ways that will improve both your credit and your overall situation. The trick is to avoid doing things that will lead to nothing but problems.
So, in the interest of education, here are three things you should NEVER do with your credit cards:
Tip #1: Don’t Pay Bills With Credit Cards
When you pay your bills with credit cards, you’re doing far more harm than good. To begin with, you’re not actually paying anything. All you’re doing is moving the debt from one place to another. On top of that fact, you’re also increasing the amount you owe thanks to the interest on your credit card balance. You should use your credit cards to increase your opportunities for growth, not to dig yourself deeper into debt.
Tip #2: Don’t Use Your Credit Card For Cash Advances
When you use your credit card to take money out at an ATM you’re not only incurring any ATM fees that might apply, but you’re also charging yourself to use your own money. What many people don’t know is that withdrawals of this nature begin racking up interest immediately. As soon as you grab that cash, you’re having to do more than pay it back – it’s actively losing you money.
Tip #3: Avoid Retail Credit Cards Like The Plague
How many times have you heard, “Would you like to save 20% today by applying for our store’s credit card?” Ever wonder why the store would be so quick to offer you what seems like a good deal in your favor?
The reality is, single-store credit cards often have much higher interest rates than regular credit cards. In addition, the fact that your card is “for” a certain store will make you more likely to put purchases from that store on the card, even when you don’t need to. Even if you avoid this mentality, your one-store card is still hurting your credit, as it will be considered “inactive,” contributing far less to your credit rating than an active card would.
When it comes to credit, knowing what to do and what not to do is the first step on the road to a great credit score. Hopefully these tips will help you avoid some of the pitfalls along the way.