6 mistakes to avoid when using credit cards
Credit cards are a great way to earn rewards, enjoy benefits, and build credit, but they can also be dangerous if misused. Poor usage can damage one’s credit scores and lead to penalties and high-interest rates due to the lack of timely payment. In fact, it is common to forget the pitfalls of credit cards when using them. So here are a few credit card mistakes to note to avoid falling into a debt cycle. Credit card mistakes to avoid Paying the minimum amount Paying only the bare minimum amount due each month will help one avoid late fees and other penalties. However, it causes interest to be added to the balance, making it more difficult to pay off later. It can be difficult and time-consuming to pay off the balance with high-interest rates. Thus, individuals are recommended to create a payment plan to aid in the management of funds and the timely payment of bills. Overspending Credit cards are relatively easy to use, which can lead to people easily overspending, especially when purchasing online. It is difficult to understand expenses when purchasing products online. Some good practices to follow include keeping credit card usage under 30% of your budget and only using a credit card for monthly budget expenditures that are easier to pay off before the monthly billing cycle ends.
