So many Filipinos are using credit cards nowadays. Why? because it’s easy to carry and credit cards make our shopping life easier. In addition, a credit card can be a great way to earn rewards and build a good credit score. However, just make sure to be a responsible user, cause if not you might face financial problems. If you’re planning to get a credit card or you’re a new credit card user, check out the common credit card mistakes you should avoid.
Common Credit Card Mistakes You Should Avoid
Be reminded that there are consequences if you missed your payment deadline. It includes the following:
- Late payment fee
- Penalty APR
- Cancellation of intro 0% APR periods
- May affect your credit score
Not paying your credit card monthly can hurt your credit score. If you’re building a good credit score, you must avoid missed payments. Take note that if you missed your payment more than 30 days, your credit score will drop from 17 up to 83 points for a 30-day missed payment and a 27 to 133 decrease for a 90-day missed payment. So be reminded to pay your credit card on time monthly.
Making Minimum Payments
Yes, the minimum payment is a must if you have a credit card but it is not advisable that you only pay the minimum due regularly. Why? because if you only pay minimum it will take longer to pay off your credit card debt. So if you can pay much more than the minimum, then do it.
Hitting Your Credit Limit
Yes, you can use all your credit cards, and max your credit limit all at once, but that is not advisable. If you do so, it will definitely hurt your credit score. Remember that if your utilization rate is very high, it will lower your credit score.
Applying for too many Credit Card
No one is stopping you from getting a new credit card but if you already had one you must think twice before getting it, why? because every time you apply for a new credit card, a new inquiry appears on your credit report which means the more inquiries in a short period of time, the greater risk you appear to lenders.
Closing a Card Impulsively
Of course, you can close your card anytime you prefer. However, it is your responsibility to pay down any balance before planning to close it. In addition, if you close a credit card the average length of your credit history will be affected which is very vital in building a good credit score. It will be better if you consider the effects before you close a credit card impulsively.
As a final point, mistakes can happen but you should learn from your mistake and move on. Be a responsible credit card owner to avoid any problems. In addition, if you build a good credit there are benefits that come with it so make sure to avoid the mistakes that were mentioned above.