Do You Have These Credit Card Bad Habits?
There are a number of actions that you can take with credit cards that are guaranteed to lead you down a path of debt disaster. Many people perform these actions without thinking as a normal habit, never realizing that these activities could be causing their debt levels to increase or cause their efforts to pay down their debt to stall. Being able to recognize these bad habits for the budget busters that they are will help you eliminate these habits from your typical behaviors.
Charging All Of Your Purchases
Many of the people that charge all of their everyday purchases do not track these purchases as carefully as they would with other payment methods, which can lead to overspending easily. Also, these individuals tend to carry a balance on their credit card from month to month, meaning that they are paying interest each month on past purchases. This increases the total price of purchasing the item versus paying cash for these same items.
Not Paying Your Bill On Time
Not paying your bill on time can have more consequences than wasting your money on late charges. Late payments can trigger a dramatic rise in the interest rate charged for using the credit card, often pushing the interest rate above 20%. Late payments on a credit card can also result in the interest rate of other credit products in your name increasing dramatically underneath a clause in nearly every credit card agreement called a Universal Default Clause. These increased interest rates can cost you hundreds of dollars in interest payments each year.
Paying The Minimum Due
It is nearly impossible to pay off the balance of a credit card by only paying the minimum each month when the payment is due. In some cases, the minimum payment marked on the bill barely covers the interest and finance charges that are added to the balance each month, keeping you paying on the credit card for years with little to show for your efforts. Paying more than the minimum will reduce the amount of interest you are paying each month and will help you pay off the credit card much more quickly.
Opening Store Credit Cards For Discounts
No company is in the business of losing money, so you better believe that you will end up paying more for the store credit card than you will be getting with the discount being offered. The credit cards can generally only be used at a specific store, causing the consumer to spend more with them and less with competitors, and the interest rates for these credit cards are generally higher than for general purpose credit cards.
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