Credit cards can be beneficial and even necessary for juggling your finances. However, without correct management and usage, credit cards can be the downfall of your entire financial future. Before getting a credit card, it is a good idea to browse www.creditrepaircompanies.com in order to make contact with credit repair companies that can guide you through responsible credit card use. Below are the top four most common credit card usage mistakes to take note of.
1. Late payments
The biggest mistake you can make with your credit card is to make late repayments. This is the number-one reason for bad credit ratings.
Not only this, but late payments can also increase your interest rates, which means that you will be getting into greater debt in the long run. Adding insult to injury is a late fee that can reach up to 3% of the actual outstanding payment if you miss payments consecutively.
Being 30 or more days late on a payment can reduce your credit score by as much as 100 points! Keep in mind that your payment history qualifies for 35% of your credit score, so be sure to make those payments on time every time! Setting up automatic payments might be a great idea.
2. Only paying the minimum monthly amount
The credit repair companies will all advise you to always pay the minimum monthly fee but to also pay more than that when possible. It just makes sense: The more you pay monthly, the more quickly you will become free of debt.
Your credit lender loves it when you fall into this cycle and believe the myth that you should pay only the set amount each month. That’s because they can hold you for longer and get more money out of you in the form of interest.
When you pay only the minimum fee, you will wind up paying numerous times the value of your purchases for many more years to come, which will only hinder you financially in the future.
3. Maxing out credit
So, because you pay your minimum fee every month and on time it means that you are safe in maxing out your credit card limit right? Wrong!
It is recommended that you only use up to 30% of your credit limit on each credit card. Spread out your expenses between your cards but keep them down to 30% on each.
Doing this will ensure a more favorable credit score and easier lending and financing in the future.
4. Using cash advances
Cash advances should only be used when there is no other alternative. Your bank may send you a checkbook, but don’t feel comforted by this!
Cash advances usually come with a plethora of extra fees, as well as higher interest rates on the cash advance amounts.
Visit www.creditrepaircompanies.com to learn more about how to use your credit card responsibly. They can also work with you to create an effective financial strategy.