By Kyle Olson
Credit cards have become essential pieces of plastic within the wallets of Americans. Without them, people feel out of the loop and unable to fully feel safe if an “emergency” arises.
The problem is; most credit cards aren’t strictly for emergencies. They are often over used and under monitored, causing their owners to fall into serious debt; sometimes even having to file for Chapter 7 personal bankruptcy.
MSN has detailed the 7 most commonly committed mistakes when it comes to credit card usage.
Paying Your Bill Late
This is one of the most common mistakes. This is a big one too, with higher interest rates and lower credit scores at risk when you don’t pay what’s due on your card. Experts suggest paying bills online so you can monitor your account before it’s too late.
Balance Transfer Nightmare
Some offers seem like a great idea; move high interest balances to low to no interest cards in order to save on the interest. However, some cards have fine print that states the rate will rise to much higher than the introductory rate after the promotional term is completed. Beware say the experts.
The Minimum Payment Rut
By constantly paying the minimum balance due every month, you end up paying much more in the long run for items you purchase on your card. In the end, the interest causes you to pay more than the balance sometimes, say the experts. Pay twice or triple the minimum in order for you to be debt free in less time.
Using All Available Credit
Credit utilization ratio is a large factor in many things, including your credit score. When you have a high balance compared to your credit limit, it looks bad. Experts say, do not spend more than 30 percent of your credit limit at any given time for an ideal credit situation.
Taking cash advances from your credit card is an easy way to rack up the fees. Credit cards often charge huge penalties when you take out cash advances on credit cards so beware. On top of the penalties, a fee is usually assessed when you take out the money, furthering your financial headache.
Spending To Earn Rewards
Almost all cards are now offering rewards. Many offer airline miles, or credits for cash after you spend a certain amount. Many people don’t realize the amount of purchasing needed in order to rack up the amount of points needed for their desired perk.
Some cards are only available with annual fees due to the borrower’s credit history. Experts say to avoid these annual fees at all cost due to the wasteful nature of the fee itself. Fees are now capped at 25 percent, thanks to a government program designed at taking much of the burden of credit card debt off of the average American citizen. Experts still say to be diligent in shopping for new credit cards and look for cards that offer no annual fees or excessive annual fees in order to make sure you’re not causing any further financial troubles for yourself.