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5 Bad Credit Card Habits You Need To Unlearn

We cannot deny that in today’s world, credit cards have become an essential part of daily transactions. Some use it to pay for groceries or even to buy our wants as well as other necessities. From it, we gain rewards and build credit.

Whatever we decide to use it on, we should always remember to use it sparingly and avoid these mistakes that we might not know we’ve been doing all along.

Carrying a balance and thinking it will help your credit

If you think that having a balance on your card will increase your credit score, then you’re definitely wrong! You’re doing the exact opposite because you’re wasting away more money to pay off interests that accumulate. Instead, you should try to pay your entire balance monthly.

Maxing out your card

Most people aren’t also aware that reaching the credit limit is not helpful to your credit score. Credit card companies will see outstanding balances in big amounts as a sign that you are irresponsible handling the money you are loaned. Other than that, it also helps prevent getting you stuck in more debt than what you can afford to pay. Try using below 30% of your limit, for starters.

Assuming the annual fee is worth it

While it is a given that there are better and more benefits when you register with cards that have an annual fee, there are also drawbacks. It becomes difficult to manage several cards and split the spending among them. Always consider looking for options that either cost less or do not have costs at all. Take for example, Discover and Chase Freedom.

Forgetting to collect rewards

There’s no use in gaining rewards and points from your credit cards if you do not spend them! The points you gain might seem small and unimportant, but when you give it time to grow, it could add up and be beneficial in the long run! Remember to always check and learn how you could maximize these points. Who knows? You might not only be able to save money, but also earn product freebies, travel miles, and other enjoyable perks right at your fingertips!

Closing cards you no longer use

Like all people, you will need to clean up your wallet once in a while. In doing so, you might be thinking of getting rid of some cards that you have not used in a long time. But next time, try to pause and double-check before you do this! When you cut off a credit card line, you’re hurting your credit score. Even when the card is not being used anymore. This is because you are reducing from your given total credit. In addition, you are decreasing the age of your accounts, comprising an estimated 15% of your credit score. What you can do instead is to store the card away collectively and protect them at all costs. Every so often, try charging small transactions to it, such as lunch or a basic grocery run just so the credit cards will not be shut down for being inactive.

Now that you know what makes for bad habits as a credit card user, learn these things by heart. It is not enough to know the basics of handling credit and keeping your credit scores up. You must also understand how charges work, and what you can do as much as possible to save money and maximize opportunities. After all, credit cards are supposed to be your friends!

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Photo by Andrea Piacquadio from Pexels

Photo by Andrea Piacquadio from Pexels