Why should you be careful with your credit card swipes?
With the holiday season fast approaching, the holiday spirit of sharing and exchanging gifts with everyone may turn into a spendthrift. Although giving never hurts, it is in your best interest to stay within your means. Using credit cards has a number of advantages. But using plastic money recklessly can cost you big time!
The longer you take to settle the credit or the bigger your debt, you end up paying that much more in interests. Moreover, your credit score gets so badly affected that getting a loan for your dream home, buying car insurance or even getting a place to stay on rent can become difficult. Don’t let the festive season offers fool you into taking mindless decisions because their effect won’t be over at the end of this season but can make you pay for a very long time to come!
Some credit card mistakes to avoid this holiday season
One, don’t overspend or max out your card: Spending more than 30% of your available credit limit can really hamper your credit score. Also, don’t miss on paying the bills on time. Try to use only one card. The more cards you get, the more will be the chance of missing out on payment deadlines. Missing even one deadline could mean your credit score tumbling down by 50 to 100 points. Try to use a low interest card.
Two, don’t fall for rewards: Rewards is indeed an interesting concept. What is not there to like about rewards? Unfortunately, when it comes to rewards, many users start overspending or using credit cards just to avail a discount opportunity, a cash award or getting passes or addition of some loyalty points. Although all these can be really intriguing for someone with a strong fiscal discipline, if you are someone who doesn’t have a great credit record, don’t fall for rewards.
Three, don’t fall for store credit cards: If you are not a regular customer at the store or you don’t have a great credit history or you have already opened credits at other stores also, try not to fall for this scheme. Every time, you avail a new store credit, there is an inquiry that brings down your credit score by a few notches. Also, the rate of interest is usually much higher than normal credit cards.
Four, pay the full monthly bill: Don’t continue to revolve the credit. This could lead to a huge pile up and force you to pay a lot more in interests. Pay more than the minimum due amount even during the holiday season. Don’t let your expenses crimp your ability to pay your bills.
Five, have a budget and stick to it: Track spending on a daily basis during the holiday season. You should cap your spending limit and ensure that you don’t spend more than it. Pin it to your mirror or somewhere where you can see it. Don’t buy expensive gifts for everyone, even if you know that you are deep in debt.
When you have a credit card, you need to act smartly and responsibly. It could save you during emergencies but not using it wisely could also put you in a spot of bother. Also, use your credit cards in a safe environment. The number of scams, data thefts and misuse increase every year during the holiday season.