Credit Card Review Blog

The 10 Worst Credit Mistakes You Can Make

Many people are getting way over their heads in debt. It is important to know how to manage different credit accounts. Try to avoid these mistakes in order to keep your credit score high.

1. Too Many Cards. A common myth with credit cards is that the more you have, the better your credit score is. Having too many cards is not only a temptation, but a warning sign to lenders. If a lender sees multiple revolving credit accounts (even with zero balances), it causes them to question what will happen if the card holder falls into temptation or comes across an unforseen event.

2. Not Shopping Around. All too often people sign up for a credit card or a credit account on a whim. This mistake is costly. It pays to shop around for the best cards. There are many factors to shop for. Which card has the best rate? Which card has the best service? Which card requires an annual fee? And so on. Use the internet and different financial publications to determine which credit card is the best for you.

3. Fine Print. As with many “offers,” it is critical to read the fine print. Credit card companies explain the terms of the contract here. This tiny detail is too often overlooked. If you are going to borrow money and be required to pay interest, you’d better know the terms of the contract.

4. Minimum payments. Credit card companies often set a “minimum payment” to ensure that you are going to pay interest. By only making minimum payments, you are enslaving yourself to the credit card company. You will end up paying close to three times more for what you buy if you don’t pay off your card at the end of the month.

5. Late payments. Why do people pay bills late? This boggles my mind. Not only do people make minimum payments, but they end up paying an additional $10-$20 in late fees. In addition, these late payments show up on your credit report. All it takes is a little budgeting to make sure every payment is made on time.

6. Credit Limit. Your credit limit has been established for a reason. If you go over that limit, you will be charged an additional fee. If you can’t tell, it is very important that you are careful with these credit accounts. The credit card companies have created many ways to charge you extra fees if you aren’t careful.

7. Pay attention. Pay attention, Pay attention, Pay attention! Check your monthly statements for any mistakes or signs of identity theft. A lot of times, you are able to view the current activity of your card at any time. Just take a few minutes every couple of days to make sure that you know exactly where you stand with your credit card.

8. Frivolous spending. We live in a society today where we are taught to buy things we don’t need. Be careful not to fall into this trap. Carefully following your monthly budget will decrease the impulse to buy things you don’t really need.

9. For all the wrong reasons. There are many good credit cards out there. If you are careful and wise with your credit card usage, these cards can be very beneficial. Don’t choose a card just because you can get free stuff. You know what is best for you. Make sure you choose a card that will work for you, not against you.

10. Introductory rates. This corresponds to reading the fine print. Most times, the rate increases quite drastically after the introductory period is over. Most people don’t know this or don’t realize how much the rate increases. Be careful to take that into consideration when choosing your card.

Credit cards can be helpful if used correctly. Make sure you shop around and follow these instructions. These tips are valuable for saving your credit score.