On television, credit cards are advertised as a way for you to get the things that your heart desires most. What these commercials do not tell you is that is it very easy to develop bad habits with your credit cards that can destroy your financial stability and leave you with a large amount of debt. It is important for you to be able to recognize these bad habits for what they are so that you can avoid becoming a victim. Here are several of the bad credit card habits that you should break now to improve your financial future.
Paying The Minimum Amount Due
Want to stay in debt forever? Pay only the minimum amount due as payment when you are making your credit card payment each month. Many people do not realize that the reason why their minimum payment is so low is because the credit card company is only legally obligated to make you pay the interest due for the month and 2 percent of the balance. This means that nearly all of the money that you are paying to the credit card company is going towards interest with very little going towards paying down your balance. If you only make the minimum payments on your credit card while continuing to charge purchases, you will be paying interest to the credit card company for the rest of your life.
Making Payments Late
Late payments on credit card accounts can be devastating financially. The repercussions go far beyond the expensive fee that will be charged directly to the balance of the credit card as soon as the payment date is missed. Late payments on your credit accounts are reported to the credit monitoring bureaus for inclusion in your credit history. Having these payments on your credit history can lower your credit score by a significant amount, which can result in being denied credit or job opportunities in the future. Try to make your credit card payment as soon as you get your statement to avoid missed payments that can cost you much more than they are worth.
Opening Additional Credit Cards For Store Discounts
If you have gone shopping at a large retail store lately, chances are that as you waited to check out, you were asked whether you wanted to sign up for the store’s credit card in return for a substantial discount on your purchase. This is usually a bad idea. Store credit cards have notoriously high interest rates and credit limits that are pretty low. In many cases, they can only be used to purchase merchandise at the store that issued the card to you, meaning you are now paying interest to the company for the purchases you are making there. You are better off just waiting for the next sale and paying cash for your purchases.