Credit cards are a staple of finance. They allow you to borrow money to make purchases. Most have revolving balance systems, and you pay month to month until your debt is gone. While the arrangement is simple, many people are guilty of making the same credit card mistakes.
What are the most common credit card mistakes?
Let’s talk about debt. Of all the credit card mistakes a person could commit, having too much debt is the worst. However, there’s a caveat. Not all debts are bad. There are ways to use credit cards wisely.
For instance, let’s say you need new appliances. It’s easier for you to pay the large purchase over time than immediately. A credit card allows you to do that.
Consequently, most people fail at the accumulation of debt. They make more purchases without fully repaying for the first one. In June 2019, U.S. consumer debt rose to $4.1 trillion. That’s a lot of revolving balances, not to mention a lot of debt.
Credit cards are not free money
A recent survey found that 10 percent of college students believe they do not have to repay credit card charges. Those students had the impression that credit cards were the same as free money. It’s a common misconception since using a credit card isn’t usually taught in school.
Most people are unaware of their interest rates
Although interest rates are competitive, they aren’t all the same. The difference can cost you a few hundred dollars. If you want to manage your credit card responsibly, keep an eye on your APR.
Pay more than the minimum balance
The CARD Act requires minimum payment warnings on credit card statements. The law gives consumers a fair comparison between paying only the minimum or paying more. If you want to get rid of debt quickly, experts agree you should always pay more.
Avoid credit card mistakes
While we covered the most common credit card mistakes, there’s still a lot of information you should know. Here are the links to our most popular credit card articles:
When Should You Get Your First Credit Card?
Store Credit Cards VS. Branded Credit Cards
Do I really need to charge it?
Why You Should Get Involved with Your Credit Score