Credit card mistakes can be hard to come back from and can haunt you for months and even years to come. It’s important to avoid making these mistakes, in order to try and save your credit score. Since credit scores can be used for so many different things, including jobs, it’s important you do everything you can to protect yours.
Only Paying the Minimum
If your credit card company tells you each month the minimum amount of money that is due, then you may think you are fine paying that and can move on. It’s even worse if you just set up the auto-pay for the minimum amount and forget about it. If it’s out of sight and out of mind and you are ignoring the statement, you could be drowning in debt for years.
You will be spending way more than you ever borrowed just on interest. Use auto-pay to your advantage and still set it up, but use it for the total balance. If you don’t want to set up auto-pay, then set monthly reminders to pay your bill. This way, you can still check for accuracy and make sure you won’t overdraw your account. If you can’t pay the total bill, pay as much as you can above the minimum, in order to save on interest costs.
Using the Card to Borrow Cash
A cash advance can be very expensive and many credit card companies will charge a cash advance fee of typically 3% of the amount borrowed. Many companies also have a higher interest rate for cash advances and there is no grace period for repayment, so interest will begin accruing immediately.
If you need cash right away and don’t have anything saved in an emergency fund or can’t borrow from someone, consider a personal loan instead. If you have good credit from not making terrible credit mistakes, you may qualify for a low-interest personal loan. Don’t be tempted by a payday loan. If you are going that route, then a cash advance would make more sense.
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Lisa Kroulik is a freelance content marketing writer with eight years of experience. She has a special interest in helping readers make sound financial decisions and financial recovery topics. After having filed bankruptcy in 2008, Lisa took the opportunity to make a fresh start and learn from her mistakes. Today she has a credit score of 830 and no debt other than a mortgage.
