Know Your Rights

Credit Card Mistakes

Owning a credit card can be an important aspect of your financial worthiness.  It can put you on the map to building your credit history and open doors to obtaining credit opportunities.  However, it takes a responsible consumer to use a credit card conscientiously.  During the holiday season credit card offers may pop up in your mail box on a daily basis. Don't be tempted by the offers without first following the dos and don'ts of owning or using a credit card.  If you are looking to clean up your credit report and finances in 2014, follow these easy steps to owning a credit card. 

Rule Number 1:  Do not have too many credit cards
Having too many credit cards can wreak havoc on your credit score.  Too many credit cards create temptation for some consumers.  Some consumers don't know how to stop charging and more than a few credit cards allows you to continue charging on different cards when you have reached your credit limit.  

Rule Number 2:  Understand the offer and introductory rates
Often times, consumers are tempted by balance transfers and feel relieved to transfer their existing balance to a non-interest bearing account.  Understand that credit card companies are in the business of making money and an offer that sounds too good to be true usually is just that.  Make sure to read the fine print before transferring your balance.  Credit card companies offer low or no interest as an incentive, but this offer can expire after a short period of time and then the interest will sky rocket to more than you were initially paying.   

Rule Number 3:  Choose a card that best suits your needs
Don't be tempted to choose a card for the wrong reasons, such as rebates or reward programs….perhaps you need to travel and a card sounds appealing because it offers you free miles.  Choosing a card for the wrong reasons can cause you financial distress.  Make sure everything the card has to offer is right for you, not just the perks.  Make sure the card offers the best rates and terms available to you.

Rule Number 4:  Make more than your minimum payment
Failing to only make your minimum payment every month will get you into hot water.  Paying the minimum amount will amass additional fees and interest payments that will allow your credit card bill to skyrocket beyond what you can afford to pay.  Minimum payments often allow your credit card bill to end up at your limit and will destroy your credit.      

Rule Number 5:  Do not make late payments on your bill
Making late payments on your credit card bill is almost as bad as not making a payment at all.  Failing to make a payment will mean additional late payment penalties and a mark on your credit report.  Credit card companies often punish failure to pay by charging late-payment penalties that can cost more than your minimum monthly payment.  To make it easier to pay on time, set up a reminder on your computer or phone to pay you bill or try setting up computer payments so all you have to do is transfer the money on line to avoid the hassle of mailing a check. 

Rule Number 6:  Do not exceed your credit limit
Exceeding your credit limit will destroy your credit score.  If you are getting close to your limit and feel you cannot pay off your balance in full every month, try spending cash on necessities or contact your credit card company to try to increase your credit limit, not to allow you spend more, but to protect your score

If you are having trouble with your finances and wish to speak with a licensed attorney for a free case review, contact SmithMarco P.C.

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