Credit cards are a huge responsibility. But, if handled properly, they can make managing budgeting easier while earning you rewards like cash back and airlines miles.
So, how do you make reap the benefits without blowing them through careless mistakes?
Here are four common ways to misuse credit cards so you can watch out for them and keep your credit score sky high.
1. Carrying a balance on your credit card
Nothing wipes out the benefits of using a credit card like carrying a balance for months on end. Compounding interest quickly negates any miles or cash you think you’re racking up.
Figure out a good payment date and set-up auto-pay. The only thing you’ll have to think about then is keeping enough money in your checking account to cover your entire balance each month.
Photo Credit: Flickr
2. Failing to earn your welcome bonus
What made you choose this card? There’s was probably a great promotion that worked for you like spending a certain amount by a deadline to earn thousands of points. But if you miss the deadline there’s not a customer service rep in the world that will listen to your sob story and give you the points anyway.
When you get your new card, make an entry on your planner with reminders so you earn that welcome bonus. Call the credit card issuer if you have any questions about the promotion.
Photo Credit: Pexels
3. Not knowing how credit card scores are calculated
Credit scores fluctuate, sometimes for little things you can’t do anything about and sometimes for big problems you need to fix right away. You can’t do that unless you know how credit card scores function and now often they change.
Something that many people don’t realize is that every time you apply for a credit card it causes a drop in your score and will stay there for up to two years.
Photo Credit: Flickr
4. Not using your points and perks
If the whole point of getting this credit card was for a certain bonuses or services, make sure you are using those things to its fullest advantage. And, if you’re paying a few hundred dollars for an annual fee just to get to use the card, make sure you aren’t spending more money than what you’re getting back in perks.
Ask yourself would you be spending money on these things or at this retailer anyway? Use every perk available to get the most value out of your card.
Photo Credit: Flickr
Credit cards can be tricky. But once you understand the rules and perks, the right card can unlock some pretty cool benefits.
And, there’s always someone on the other end of that toll-free number on the back of your card to answer any questions or explain the rules so you can maximize all the features and bonuses of having the account.
Have any tips you think are worth sharing? Let us know in the comments!
