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How to Avoid Common Credit Card Mistakes
You need to avoid several common credit card mistakes if you want to maximize your spending power. For instance, you should not exceed 30% of your credit card limit. It will help you keep a high Credit Utilization Ratio (CUR) and maintain a good credit score. Also, many people don’t read their monthly statements, which may contain errors and instances of fraud. Make sure that you look at your statement every month to ensure you don’t miss anything.
Avoid annual fees
One of the best ways to avoid annual fees when applying for credit cards is to call the card issuer and ask for a waiver. Usually, you can get this waived if you have a compelling reason, like the lack of value from a travel credit card or COVID-19 restrictions. If you’ve had the card for several years, the issuer may be more likely to waive the annual fee once you reach a certain level of spending.
However, negotiating isn’t always successful. Some credit card issuers have other products that they offer without annual fees. If you’re not interested in paying for one, it’s best to avoid it altogether. You can also try calling the issuer to get them to waive the fee, but this method isn’t always practical. You should still avoid annual fees whenever possible and consider your financial situation before applying for a new credit card.
Another way to avoid annual fees when applying for credit cards is to be aware of any other fees associated with the card. Annual fees can range from $95 to $500 and add up over time. You should carefully consider the benefits of any add-ons and fees to ensure you’re comfortable with the cost before committing to the card. It’s also important to remember that a fee on a credit card is not always worth it.
While annual fees are generally bad, some of them are worth paying. Suppose you’re interested in using the card for travel purposes. In that case, you can request a waiver from the card issuer. If you don’t have the funds to make these payments, you can use the card to purchase and then pay the fees when you don’t need the money. That will ensure that you enjoy all the benefits of a credit card while working on improving your credit score.
Avoid charging non-discretionary expenses.
Racking up credit card rewards and building credit are beneficial for your finances. There are certain expenses that you should avoid charging on your credit card. While putting some of these expenses on your card may be convenient, you could pay a lot in interest and fees. Here are some tips to help you avoid this problem. Below are a few examples of expenses you should never charge on your card.
Food is an ordinary discretionary expense. While it might seem necessary to eat out every night, it is something you can cut back on. You can also save money by making your meals instead of ordering food. You can also cut down on your gym membership. You should not charge meals out if you have a family, as it can add up quickly. Also, try to avoid using your credit card for entertainment, as these activities will only cost you money in the long run.
Avoid charging non-discretionary expenses on a credit card.
Although earning rewards and building credit is great for your finances, avoid charging certain expenses on your credit card. It can lead to huge fees and higher interest rates. Instead, stick to a monthly budget and pay off your balance in full every month. It is easy to fall into charging every small purchase on your credit card. To stay out of this trap, treat your credit card like cash. Always check the balance every day, just as you would with money.
Discretionary expenses are items that you don’t need, and they are often made of more features than you need. Examples include cell phones, computer software, and other items with many bells and whistles. Even if you don’t need to buy these items, you should not use your credit card to pay for them. A good rule is to charge them to an account with a lower interest rate.
Avoid charging too many credit cards.
While rewards credit cards can be great ways to build your credit score and earn cashback on everyday purchases, they should be used responsibly. Avoid opening too many credit cards to prevent damaging your credit and destroying your savings. Instead, open one card at a time and use it for purchases you need. That will keep your balances lower and allow you to take advantage of promotional offers without compromising your credit. Here are a few other ways to maximize the benefits of rewards credit cards:
Avoid charging too much on a credit card.
When it comes to budgeting, one of the best ways to reduce the amount you spend on your credit card is to treat it like cash. Treat it as you would your cash and check your balance each day, just as you would your cash. That will prevent you from going into debt without realizing it. Using your credit card for impulse purchases can lead to credit creep, quickly accumulating into overwhelming debt. If you are using it for emergencies, check your balance often, like you would your cash.
Once you realize that you have a credit card debt problem, the first step to regaining control of your finances is to stop charging and make a budget. For help developing a budget, you can contact a certified credit counsellor. They will help you get your finances back in order and give you a free debt analysis. Once you have your budget down, pay off your bills before their due date. Missed payments are reported to the credit bureaus and remain on your credit report for seven years.