21
Jan

Whether you are a seasoned credit card user or have just gotten your first one, there are a few things you should keep in mind. You should always be aware of credit card basics such as knowing your card has a expiration date and bigger things like knowing the interest rates. Learning the basics and educating yourself can help you become a smart user and improve your credit score in the process. While reading up about the in's and out's of credit, you should also be aware of the negative aspects of credit. Making a false step with your credit card can hurt your finances and send you into bad credit land. By avoiding these drawbacks, you will better educate yourself and work on your finances all at once.

Missing payments
Each credit card requires you to make a minimum payment, which will have your interest charge factored in. This payment is to help you take care of your balance. Missing a payment is a mistake you should avoid.

If you miss a credit card payment, not only will you be assessed a late fee but it will also negatively affect your credit score. This derogatory mark can also be on your credit report for an extended period of time, sometimes up to 90 days. The best way to avoid this mistake would be to set up a payment reminder. This can easily be done by putting a calendar reminder in your phone or writing it down and sticking it to your fridge.

Overspending your balance limit
When parents bestow credit cards upon their children, their words of wisdom usually center around the fact that credit cards are not like cash. This is sage advice, but sometimes it may go on deaf ears. If you treat your credit card like cash, chances are you will overspend and your balance will go through the roof. Not only will this sink you into debt, but it will also raise your credit utilization rate, each of which hurt your credit score.

In order to help curb overspending, do your best to limit how much you swipe your credit card. This may be easier said than done, but using your credit card sparingly will help you in the long run. It is still important to make purchases to build credit, but try to limit it for small purchases such as buying lunch once a week or buying coffee every morning. Charges like this will not only help you build credit but also avoid you going in debt.

Signing up for reward cards blindly
Credit cards that come with rewards can be a great perk for established credit card users. Sometimes these rewards can be airline miles, money for gas or even just straight up cash. This can be an exciting option for many users, but be sure to look before you leap. Many times rewards cards will come with higher interest rates than normal cards. Also, some rewards cards will require you to spend a certain amount of money to even get a little bit of a reward. Using up a good portion of your balance to get a little reward may not be worth it.

While investigating rewards cards, make sure you read the fine print. By looking at all of the rules and regulations you will be better able to decide whether this type of card is for you.

Constantly doing transfer balances
Using up a good portion of your balance and being in debt is never a position you want to be in. This situation can also be a bummer if you have high interest rates. A higher interest rate will cause your charges to be more than they would be without the rate. Many credit card holders in this situation may consider a balance transfer. This option will let you take your current balance to a new card with a better interest rate. This can help you get your balance down and lessen your interest charges, but you don't want to get overzealous about this option.

Repeatedly doing a balance transfer because you have too much debt is not a good plan. A transfer balance can help you, but as long as you are making smart financial decisions in the process.

Signing up for too many cards at once
If you have already been a credit user for a number of years, you may think it is time to get another one. Although it is best to avoid getting too many cards, limiting yourself and being financially responsible can make it OK. While on the search for a new line of credit, make sure it is something you want. When applying , issuers will pull your credit report. This is known as a hard inquiry and will negatively affect your credit score.

To avoid this, read up on the specific card you want. Look at the interest charges, fees and any other details in the contract. Once you have come to a conclusion, you can then apply for a card.