Mind of Money

December 19, 2017 at 1:00 am

3 Credit Card Mistakes to Avoid

credit card purchaseCredit cards are one great invention that has revolutionized operations. Connecticut banks know this. If you use it correctly, a credit card can build your credit score and earn you offers. On the other hand, if you use it in the wrong way, a credit card can affect your credit history.

With that in mind, here are three mistakes to avoid with your credit card irrespective of whether you are using it for the first time or not.

1. Making “Just Enough” Minimum Monthly Payment

A credit card has a minimum monthly balance, and it is tempting to want to pay that exact amount. While doing so might save you some cash, you might end up paying more interest on a purchased commodity if your balance is low. Pay more than the minimum monthly payment to clear the balance quickly.

2. Getting More Than One Card

Every time you fill in a credit card application form, your credit report gets a hard inquiry. This causes a drop in the credit score, and having more than one such makes the matter worse. Does that mean that you cannot have more than one credit card?

No. You can have more than one credit card, but do not apply for your second credit card right after getting your first one. Allowing ample time between card applications will be good for your credit report.

3. Taking Large Cash Advances

Cash advances have higher interest rates than most purchases. These accrue interest from the first day. Cash advances also have a flat fee and a small percentage of the cash you are taking out as a cash advance. Avoid taking cash advances unless absolutely necessary.

Credit cards are part and parcel of personal banking. You can shop with ease and access money whenever you need it. However, using your credit card can either improve or worsen your credit score. Avoid the common credit card mistakes mentioned here for financial success.