2 Credit Card Sins You Must Avoid

It is exciting to have plastic cash, especially since it gives you the freedom to buy whatever you want and whenever you need it. But credit cards are dangerous if you cannot use them properly. They can ruin your credit report and your finances. This is why you must use credit cards judiciously so that they can continue to serve you. These 2 tips here will help you get started -

1. Never Ever Pay Late

The moment you receive the credit card statement, check out the amount you owe to the bank and the due date. Take extra care to remember the due date and make the payment by that date under any circumstances. Forgetting the due date or failing to pay within that date for any reason will cost you dearly:

a.) Late payment is the biggest sin in the eyes of credit rating agencies and they will penalize you heavily even if it is just a single error. It takes years to remove a late payment entry from the credit report and it will continue bother you for a long time. I once forgot to pay my tmobile bill for a couple of months and even though it affected my credit score by only a few points as the amount was less than $100 but those few credit points made me unqualified for a car loan, which I finally got after 2 years when my credit score improved because of other factors.

b.) When you fail to pay within the due date mentioned on the credit card statement, you will have to pay a considerable amount of penalty in addition to the bill. This amount be quite big and will include state and federal taxes and other fees.

c.) Credit card issuers tend to lose confidence with customers who fail to pay their bill on time. This might result in increased rates of interest on your credit card necessitating you to pay more in the future.

Many credit card experts recommend paying off at the minimum due amount even if you are unable to settle the whole bill. This will get you out of trouble for the time being, but it will come back as a bigger problem later on. Read the next point carefully to find out why.

2. Don’t Pay The Minimum Due Amount For Too Long

A minimum due amount on the credit card statement will enable you to get the company off your back for the time being. This will not ensure that your credit has gone forever and will never come back to haunt you. Many people make this their habit and often end up paying dearly for it.

The biggest problem with paying the minimum due amount on your credit card is the fact that with a moderately high interest rate, your due amount will almost double when not paid in full. That is why you must use this clause as only a one time contingency plan instead of making a habit out of it.

These 2 credit card tips will help you keep a fair credit performance report and make you eligible for loans and credits with lower interest rates in the future.