5 Bad Credit Card Habits and How to Avoid Them

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Credit cards are essential financial tools in our lives today. 

If you use them responsibly, you can build your credit, earn rewards, and purchase different products easily. 

However, the problem comes when you develop bad credit card habits, as these could affect your credit score and lead you into severe financial problems, such as accumulated debts.

Here are some of the common bad habits, and how you should avoid them

  1. Carrying Balance Forward

Most credit card users have this habit of swiping more than their cards can afford. So, when they realize that they cannot set the bill in due time, they will carry forward the balance aiming to pay it in the next cycle. 

The problem with carrying forward these bills is that your credit card will incur high-interest rates, and you end up paying a lot of money as interest.

Worse still, if you have the habit of paying only the minimum amount per each cycle, your balance accumulates hefty interest amounts, and your debt continues to grow.

How to Avoid This Habit

Unless the product you are buying is necessary, avoid swiping if you cannot afford to pay the total amount in due time.

  1. Late and Missed Payments

Building a good credit score can take you years, but it only takes a few minor mistakes to ruin it. 

Your payment history is one of the crucial factors in determining your credit score, and one late payment can dent your credit history. 

However, many people don’t realize the severity of missing payments, as this is one of the most common problems among credit card users.

How to Avoid This Habit

Automatic payments are recommendable if you want to avoid late and missed payments. If you have several credit cards and want all them to remain active, use them for small subscription costs, but ensure they are on automatic payments. 

As a result, you will be able to pay off all your primary credit cards before they are due.

  1. Opening and Closing Multiple Credit Cards

Having many credit cards may sound like a brilliant idea, but if you develop the habit of closing many of them all at once, your credit score will be affected. 

Most users cancel their credit cards with positive payment history to avoid the temptation of using the card. However, the longer you stay with a card that has a positive payment history, the better your credit score will be.

How to Avoid This Habit

Instead of closing an account for fear of overspending, it is better that you store it away in a place you cannot easily reach. 

Again, don’t apply for multiple credit cards if you don’t need them. 

It is advisable to have a few active cards that can improve your credit score as opposed to having multiple dormant cards.

  1. Failure to Read Credit Card Statements 

If you have different bill statements being sent to your mail every month, checking each of them can be tedious and time-consuming. 

However, this can help you avoid severe problems such as billing errors, unauthorized charges, and credit card charge-backs. 

How to Avoid This Habit

Develop the habit of reading all your credit card statements. As you are doing it, don’t just focus on the balance and payment information. 

Instead, review the whole statement thoroughly and confirm if the account activity is in order. If you notice any errors, report the matter immediately to the card issuer and follow up to see that it is resolved.

  1. Taking Cash Advances

If you have the habit of taking cash advances, you end up spending lots of money on credit card transactions. 

First, the interest rates are incredibly high, and most of them do not have a grace period. This means that you start incurring the interest charges right away. 

Then, you will be required to foot a cash advance fee every time you want to use your card to get cash.

How to Avoid This Habit

Stop using your credit card as a source of cash. 

Instead, look for other means to get cash or cut on your spending so that the amount you get as salary or wages is enough to sustain you.

The Bottom Line

If you are guilty of any of the mentioned bad credit card habits, it is not too late to drop them off and adopt good financial habits. 

The sooner you drop these bad practices, the better, as it will help you to keep your financial situation on track and avoid unnecessary debts.