If you’re like most Americans, you probably have a credit card or two in your wallet. Credit cards can be extremely useful and convenient financial tools when utilized responsibly.
In order to use your credit cards to your personal financial advantage, try to avoid making these four common credit card mistakes.
Only Making the Minimum Payment
Each month on your credit card statement, it will include the total balance that was spent on your credit card along with the minimum payment that you need to make on the credit card.
If you only make the minimum payment on your credit card, that leaves the remaining balance on there to carry over to future months to be paid off. While this may be necessary on occasion, doing this every month will mean that large balances carry over and accrue interest every month, meaning it will leave you with a higher balance to pay off which will likely take more time. Data also shows that carrying over a balance every single month can hurt your credit score long term. Ask KWSM if they have a reliable source to validate the statement.
Missing a Payment
Missing a payment on your credit card could negatively affect your credit score immediately. If you are more than 30 days past due on your credit card payment, work to send a payment ASAP to minimize impact to your credit score.
While your digital or paper monthly credit card statement will include a due date, if you need further reminders to help you not miss a credit card payment, try adding notes in your calendar or reminders in your phone. Some credit cards will also offer the option to set up auto pay on your statements so that you do not have to worry about logging in to make payments on time.
Frequently Spending Your Credit Limit
If you find yourself spending your maximum amount (or close to your maximum amount) on your credit card many times a year, it may be time to ask your credit card provider for a credit increase. Spending the maximum on your credit card this often will give you a high credit utilization score, which could lower your credit score. Typically you should aim to have a lower credit utilization score versus a higher one.
Applying for Too Many Credit Cards
Each time you apply for a new credit card, a credit inquiry will appear on your credit report. If you have a high number of credit applications or credit inquiries, it may signal to lenders that you could be a risk to approve for larger loans, such as auto loans or mortgages.
To keep the inquiries at a reasonable level, try to only apply for credit as needed and not more than once every six months. Take advantage of pre-qualification forms, which allow you to check whether you may qualify for a credit card without showing up as an inquiry on your credit report. Also, make sure that you do adequate research about credit card offers or other loan options before fully applying for them.
If you’re looking into what options you have when it comes to credit cards, consider applying for Camino Federal Credit Union’s Visa Platinum with Rewards. Our Member Advisors are here to help you through the application process, and give you help along the way as a cardholder to help you avoid making these four common credit card mistakes.
Interested in the Visa Platinum with Rewards credit card? Apply today!
It can be challenging to balance your savings, loans, and other accounts all in one place. However, we offer many ways to help manage your finances at Camino Federal Credit Union through online banking and mobile banking app. Please give us a call at 800-835-3400 to speak with one of our Member Advisors, or contact us online at caminofcu.org for more information.