While credit cards are great tools to use in the case of financial emergencies and making large purchases, their misuse can also cause lots of financial trouble. You might end up being a lot of extra money in the long run if you don’t use your credit card in the right way. Financially uneducated people usually make stupid mistakes when using their credit cards, and end up regretting those mistakes later on when nothing can be done.
So, to financially educate you on credit cards, below mentioned are some of the biggest credit card mistakes you can avoid easily.
Carrying a Balance For Too Long
Many people don’t know much about credit cards, and they think that getting a balance on their credit card for a longer period of time will improve their credit score. But this cannot be farther away from reality. Credit score can only be improved by buying cheap tradelines for your card.
Carrying a balance on your credit card in the long run will definitely hurt your credit score, and will cost you lots of extra money as well. This increases your credit utilization rate, which ultimately affects your credit score.
Many people use cash-back cards for purchases as these guards save them some money, however all those cash backs are of no use when you are paying interest on your payments.
Settling on Monthly Minimum Payments
While you have to make minimum payments every month to keep yourself out of the vicious debt cycle, experts also advise that you should not only pay the minimum amount every month. In fact, you should also try to re-pay as much of your debt amount as possible.
Only making minimum payments will cause the debt to pile up over time, and you will only be paying the interest rate while keeping the principal amount intact.