Credit Cards: 5 Things to Avoid Doing!
In these financially difficult times, everybody is looking for ways to have a little extra money. Credit cards may seem like an easy answer, but there are certain things everyone should be careful of, whether they already have them or are considering getting one.
Having more cards than necessary
Too much plastic in someone’s purse or wallet can lead to massive debt. It is tempting to take out another card for more purchases, but the debt build up could become insurmountable. For example, if someone is setting up a limited company, it may seem easy to take out many cards to pay for things. However this puts the company in debt when it has barely started. It is better to explore a range of financial options.
Buying with credit cards over Christmas
The holiday period is, of course, a time of massive spending; almost 150% more than compared to other times and a lot of it is done on credit cards. It is more convenient and easy to think that it can be paid off afterwards by working extra hours. Ringing in the New Year with massive debt has become typical. But what if, instead of paying off debt, that overtime money could be put into savings? What if the New Year could begin debt free? That would be a much better present.
Paying less than the required minimum amount
When paying off credit cards it may seem like a good idea to at least pay something, even if it does not quite reach the minimum amount required. However many credit card companies these days do not see any difference between paying under the minimum amount and paying nothing. Paying less than the minimum amount does not really help and can affect a person’s balance and credit score. It is better to wait and pay the minimum amount needed than to put in any less.
Being lured in by sign up deals
Many credit card companies will offer extras and bonuses to attract new customers. Some of these can be good, such as 0% interest on purchases; however some extras may seem attractive but are not vital, such as store vouchers. It is important to not be swayed by these deals. A store voucher can be nice but is it (and another card) something that is really necessary? Rather than going through the hassle of signing up to a card just to get an extra it would be better to simply buy one of whatever it is or, for a voucher, to save up the money.
Reaching the limit
Some people will reach their credit limit every month, however doing so is dangerous. Not only will it have to be paid back, but the money is also gone when it may really be needed. It is best to see a credit card limit as savings, only to be touched as a last resort. Then if there really is an emergency for whatever reason, the funds are there to help.
Credit cards can be a useful tool, as long as they are treated carefully. It is always a good idea to be circumspect when using or getting a credit card and use it only when needed to avoid debt.