Use a Credit Card the Right Way and Avoid Making Mistakes

Believe it or not there actually are right ways to use a credit card that can actually be financially smart but it’s the mistakes that will get you in trouble.  With the amount of fraud these days, it’s risky to even use a debit card, with your bank account potentially being wiped out if anyone was able to grab your information, until you sort everything out.  Making credit card mistakes are common, so try and avoid these so you can continue down the right financial path.

Not Taking Advantage of Rewards

By making the purchases that you would be making anyways you can earn rewards in the form of miles, points you can redeem for gift cards, or even a cashback check, depending on the card.  Not taking advantage of a credit card without rewards is essentially leaving free money on the table otherwise, which depending how much your expenses in a year are that you could use on your credit card, could be worth up to a thousand dollars in rewards, again, just by making the purchases you would be making anyways, like lowes build and grow.  Seeing the rewards add up and make more purchases than you can afford is where you would get in trouble when the interest you pay far exceeds the rewards earned.

Not Using Store Card

If you shop at a certain store, whether it’s for clothes, or electronics, or both, it may actually be worth it to get a store credit card to use for those purchases.  By signing up for the card in the first place you can save off the bill as a promo percent off, but also you can receive coupons in your email for future sales, not to mention by continuing to use your card you can continue to save money off each purchase, so if you can keep spending under control, could be worth getting to save the most on what you purchase the most outside of necessary expenses.

Carrying Over a Balance

Probably the worst thing you can do as a customer, but what the credit card companies thrive on, is carrying over a balance so that you can be stuck with the APR, which on some cards, could be upwards of 16%, adding a huge portion of the payment depending on the balance that you are carrying on the card.  If you can pay off the full statement balance by the due date, then using a credit card is actually financially smart.

Not Using a Balance Transfer

If you are stuck paying a high interest rate on your outstanding balance then perhaps it’s time to do a balance transfer where you can catch one for 0% and really have your monthly payments go towards chipping away at the balance.  Keep in mind there will be a transfer fee, which could 3-5% of the transferred balance, which depending on the balance, could be a few hundred dollars, but would still be worth it if you figure how much you are saving on interest over the long haul.

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