By now you might know what good habits to maintain when you use credit cards. Most experts will tell you to pay your balances off each month or at least pay the minimum due, don’t make late payments, don’t overspend, and the list goes on and on.
Knowing the good habits is a great start, but you should also be aware of the bad credit card practices that could be hurting you. Sometimes these habits can be helpful, but keep the following “not so good” ones in mind if you’re working on building or repairing your credit. Below we have 4 tips for good credit card habits.
Transferring balances between several cards. We’ve discussed transferring a balance to a new card as an option for saving on interest, however, it should be reiterated that you need to be sure of how much you’ll actually be saving. If you have two cards and are thinking about transferring a balance to the one with a lower interest you’ll need to double check if and how much a ‘balance transfer fee’ is. Also avoid transferring balances between cards to spread your debt.
Opening up a retail credit card to score discounts or earn rewards. Part of the reason many people reject retail cards is because of their high interest rates, late payment penalties, and low minimum payments which usually just cover your interest. Rewards and discounts can be tempting, but usually these cards are not worth the risk!
Getting a new credit card for the bonus. You’ve probably received marketing material announcing “free sign on bonus” or “earn 30,000 miles when you sign up” which is attention grabbing as it should be. However, reading the fine print is where you’ll find out what the real deal is. Most cards provide the bonus so long as you spend a certain amount of money in a certain amount of time. It’s easy spending the money, but will it be easy to pay it back?
Opening and closing accounts to avoid the fees. Perhaps that rewards card was too tempting so you opened a new credit card up and now realize there is a yearly fee of $50 after your first year. You paid the balance after collecting your rewards but now have to pay $50, should you close it? This is where some consumers find themselves trapped; closing an account especially one that is newer will undoubtedly hurt your credit. Avoid this bad credit card practice by reading the fine print and understanding what you’re getting yourself into before signing up.
The Takeaway
While not all of these bad credit card practices will diminish your credit score, they could hurt your chances at getting out of debt along with hurting your credit rating. If you’re in over your head with credit card debt, let AmONE help you. Get more information on credit repair, debt management, and debt consolidation by contacting AmONE today.
