Mistakes are a part of life and even the best of us sometimes do things that harm our financial lives; but when it comes to credit cards and other debts, mistakes can be costly. Below are three mistakes you could be making with your credit cards and a few tips on how to make corrections.
- You have a credit card with a very high APR. Most of us don't set out to acquire high APR credit cards but for some reason we end up with them nonetheless. How do you avoid credit cards with APR's that would shame even street corner loan sharks? The first step is to read and understand the terms and conditions of a credit card before you sign the dotted line. Many credit card companies offer "bait and switch" zero percent APR credit cards only to hit you with the real and very high APR six months down the road. If you read the terms and conditions you can avoid this problem.
- You use your credit card to live beyond your means; but you don't call it living beyond your means. Let's face it, it can be easy to stretch your lifestyle with the use of a credit card and accumulate large debts in the process. The first step to avoiding this mistake is to get honest with yourself about what you're really doing. If it takes you 3 months to pay off a purchase you made using your credit card, then you really didn't use the credit card as a convenience, you used it as a replacement for cash and that's going to cost you your financial future.
- You make only the minimum monthly payment every month. Paying only the minimum payment every month is turning you into a debt slave to the credit card company. Do you really want to spend 3 years paying off the sweater and jeans you purchased last year? If not, then pay more (much more) than the minimum required on your credit card.