Nearly every second individual on the earth uses credit cards for making online and offline purchases. Using them the right way ensures credit points down the line, while they can cause irrevocable damage if ignored.

Stand Clear of these pitfalls to safeguard your Credit score

Using multiple credit cards when undergoing a financial crunch is not a wise deal to get. Before following this practice, remember that a credit card is loaned money.

And not complying with the conditions may make one fall into the debt trap.

Similarly, if you wish to apply for same-day loans for the unemployed, your card may be rejected if it does not meet certain terms such as credit history, credit score, etc.

Get in the habit of using credit cards wisely and earn sweet candies as credit points along the way.

To help you avoid the dangers that lurk, here are the 10 most common credit card mistakes to avoid.

Not monitoring your credit

Monitoring your credit cards often not only ensures progress but helps you spot potential issues down the line before they become irrevocable.

Make it a habit to monitor your credit frequently, keep up with your credit report and update credit scores regularly.

SOLUTION: While reviewing the credit report, look for major parameters like payment history, age of the credit, credit inquiries, etc., that share potential to hurt your overall credit score and take immediate measures to resolve them.

 Missing on payment

Missing a payment by 30 days can harm a credit score.

However, before the completion of 30 days, you won’t see a drop in your credit score.

SOLUTION: For ensuring you pay on time, set payment alerts, email, calendar alerts, or auto-pay alerts.

By doing so, you will NEVER miss a payment.

Only Making Minimum Payments

When you pay a minimum amount every month, it increases your credit utilization ratio. The credit utilization ratio is the amount you are currently using divided by the total credit available. In short, it is the amount you owe divided by your credit limit.

For example, if you have $10000 in your bank account currently in two credit cards and have a balance of $5000 on one, your credit utilization ratio is 50%. In this way, you can calculate the overall credit utilization rate.

It is because the lender focuses on credit score while lending funds for unsecured loans for bad credit from direct lenders.

Not paying your complete credit card bill may lead to increased interest charges. 

SOLUTION: Hence, develop a payment plan beforehand to carry out massive expenses hassle-free.

 Applying for multiple credit cards in a row

No matter how inquisitive it sounds, owning too many credit cards is not a flex. While applying for loans, lenders check credit reports through a hard screening process.

Whether you are seeking unsecured loans for bad credit, direct lenders, mortgage loans, car loans, etc., and applying for multiple credit cards at the same time can turn the tables against you. And numerous inquiries can affect your credit score and mirror you as a riskier borrower in the creditor’s view.

SOLUTION: To avoid this, research the credit cards and apply for only those for which you are likely to get approval. Certain websites can help you choose the right credit card in compliance with your credit card report.

 Ignoring your billing Statement

While it is time-consuming, keeping track of every transaction on your credit report is imperative to take early action against fraudsters.

SOLUTION: It is advisable to review the credit report once a month. But it is a wise idea to check your transactions a few times a week for general verification.

Taking Unnecessary Credit

These can pose a burden on maintaining your regular credit card payments. It could also surge the overall payment you owe.

For example, you take student loans, vacation loans, renovation loans, unexpected medical bills, mobile financing, same-day loans for the unemployed, etc.

Neglecting APR Offers

Many credit cards come with 0% APR offers where you aren’t charged any interest on new purchases and balance transfers. 

SOLUTION: Keep track of the 0% APR offer and the terms when the offer will end.

Choosing Long Auto loan terms

According to experts, auto loans are at an all-time high.

But it is important to avoid long-term auto loans. Here is why!

You pay more interest

For example, if you got a 36-month (3-year loan), payment would be $ 995 per month. You would pay $39,828 

· With a lower monthly payment, your car could depreciate faster than paying off the credit card debt.

· It can change your financial stability for the next 6-7 months

Closing a Credit Card

Closing your credit card with an impressive credit standing is the BIGGEST mistake of all.

A good credit score remains on your credit card report for almost 10 years. Your initiatives could hurt the credit score.

On the flip side, if you don’t have a balance on your other cards, you won’t face any major issues by closing them.

Ignoring Credit Card Agreement

Credit card agreements might seem complicated and tiresome at first, but analysing the things will help you have a grip over how a credit card works. The credit card agreement contains information about credit card interest rates, credit limits, and more.

SOLUTION: Having handover some of the important terms and compliance may prove helpful in avoiding last-minute surprises.

Hence, the quicker you adopt healthy credit habits, the sooner you can avoid credit card blunders. As you maintain your credit card history, you can leverage the benefits of cheap financing.

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