A credit card is an alluring concept for many individuals. You can pay for the items you need or want without actually having the money in the bank. While credit cards are convenient and beneficial, they can also be problematic if used irresponsibly. Here are some common credit card pitfalls and steps for avoiding them.
Maxed Out in a Hurry
Maxing out your credit cards within a few short months may result in a massive monthly payment that you simply can’t afford. It’s a good idea to use your credit card slowly and methodically. Some people set personal limits well below their credit card limit, and they may even decide to pay off the balance completely before using it again.
Multiple Credit Card Problems
Opening multiple credit cards can also be problematic for the inexperienced credit card user. Too many credit cards can get confusing and complicate the repayment process.
Missed Payments and Late Fees
Missing payments is one of the most common pitfalls for individuals with credit cards. Every time you miss a payment, you’ll be penalized with late fees and hidden charges. These charges may even be added to the principal amount of your credit card. If you rack up excessive late charges, any perks such as airline miles may be removed from your account as well.
Sudden Jumps in Interest Rates
Another credit card pitfall that often catches consumers unaware is a sudden increase in one’s interest rate. The interest rate is very important in determining how much money you will be required to pay your creditor each month. Many people pay more in interest than they originally charged to the credit card.
If your interest is advertised as quite low, you might think you’re getting a great deal on a line of credit. However, the fine print may reveal that this low interest rate only applies to the first few months of service. After this trial period expires, and after you’ve accumulated a great deal of debt on the card, the interest rate can spike and you’ll be slammed with payments you simply cannot afford.
Save Money With Credit Cards
A credit card doesn’t have to be the kiss of death for your bank account. You don’t have to struggle to make payments or flounder in a pool of overwhelming debt. If you use credit cards responsibly and avoid these common credit card pitfalls, you can have a line of credit that will actually improve your financial outlook and add to your sense of financial security.