It can actually be argued that credit cards could be used for every purchase, provided you can pay off what you charged for the month, if not for the rewards in itself. By even making the purchases that you were going to make anyways, you can earn points or cashback that would otherwise be free money left on the table. By making a few common credit card mistakes though, and you could be damaging your credit and jeopardize getting the best interest rate on the market.
Not Checking Your Credit
You just never know who has access to your information these days, whether it’s someone taking your credit card info and making fraudulent purchases or having your entire credit information compromised by a retail store or even a credit bureau. By checking your credit at least once a year, for free, you can ensure that all accounts are up to date and accurate, while keeping an eye on your credit score on your monthly credit card statements to make sure that continues to trend in the right direction. By not checking your report you are leaving your finances unprotected.
Tied with credit utilization on what makes up your credit score is payment history. While being a day late would not affect your credit score, you could get a late fee charged and may be responsible for a spike in your interest rate, it’s when you are thirty days late that it will get reported to your credit report and you can get used to seeing that blemish on your report for the next seven or so years while you try and build your score back up. If you need to schedule automatic payments so you don’t forget, it’s probably not a bad idea.
Only Making the Minimum Payment
As you start to carryover a balance from one month to the other, as your debt continues to rise, by making the minimum payment you can be sure that your account will be in good standing for the month, but that small payment will do little to chip away at the balance. By making the highest payment you can afford you will bring down that balance even further, while only making the minimum you can probably get used to seeing that balance continue to be outstanding for the next decade or two until it’s finally gone and think about how much interest you’ve paid by then.
Closing a Zero Balance Account
When you do finally rid yourself from debt, it sure should be a cause for celebration, after all, that was a huge accomplishment getting out that financial burden, so much in fact that you might think about closing your account, however by doing this you are reducing your available credit, and if you have a balance on another card you could actually hurt your score. If you don’t want to use the account any longer just cut up the card and keep the account open, and you have the best of both worlds.