Credit cards are a necessary evil – Some deadly mistakes that will drive you into debt

Whether you’re purchasing a home or a household good or an expensive gift or you’re funding your tuitions, credit cards are the answer to all your immediate impulses. With time it’s getting tougher to take out a mortgage loan or any other type of secured loan. Lenders are getting strict about their requirements and most borrowers are shoved off from the threshold due to bad or poor credit score. Have you ever thought about the main underlying reasons behind a poor credit score? Yes, it is definitely your bad credit card habits! This is the reason why credit cards are considered as necessary evil. While they are necessary for purchasing things at the go, without the need of cash, whenever you start misusing them, you tend to accrue huge amounts of debt.

Credit cards are more like loans and not grants. But sadly, most users use it in such a manner as if they have received some grant money that they don’t need to pay back. This sad truth has become the reason behind the soaring credit card debtors. Ignorance and lack of knowledge have become the sole reason behind accruing high interest debt. This needs to come to an end, given the precarious situation of the nation. Here are some credit card mistakes that you should be aware of and avoid making in order to keep debts away.

  • Getting too many cards at a time: One of the most common credit card blunders that are committed by most people is taking on too many cards. Before saying “yes” to each credit card company, stop to think whether or not you really need so many cards. Remember that the more are the number of credit cards; the better is the chance for you to drown in credit card debt. Credit cards don’t take the form of a supplemental income; they’re a loan which you need to repay. So, before taking on too many cards, wait and reconsider your decision.
  • Not understanding the introductory rates: Before you start believing that a new credit card will help you manage your money in a better way, you should get face-to-face with mistake no.2: not understanding the introductory rates. When it comes to balance transfer in order to reap the benefits of lower rates, you have to understand the significance of introductory rates. These are low or nominal rates that are offered to you only for a short span of time. You have to read the fine print of the card agreement in order to know the span of time through which you can get the introductory interest rate. If it is for 6 months, you should try your best to transfer the entire balance within that period. Soon after this period ends, the rates might shoot out of control.
  • Paying the minimum only: Although the $20 monthly payment might be too manageable, if you make the mistake of paying only the minimums on a credit card, this will clearly imply that you will be in debt for a longer time and also pay more on interest rates. Not only that, if you use more of your available credit, the bigger will be the impact on your credit score. Hence you should always strive to pay something more than only the minimum payment in order to save money.
  • Using cards for everyday purchases: Except when you’re under extenuating circumstances, you should always have your budget under your control so that you can at least pay for your monthly requirements with your income. Don’t make it a habit to pay your utility bills and groceries with your credit cards and rather try to take this major step towards controlling your expenses. Make sure you only purchase with your cards when there is a dire necessity and when the amount is huge, so much so that you don’t have enough cash to pay it off now. You don’t require incurring interest charges for those necessary items as they should be paid off with your monthly income.
  • Using cards for medical bills: Medical bills have now become increasingly expensive. Nevertheless, if you have trouble in paying off your medical bills, you can negotiate an agreement with the hospital authorities whom you owe money. Don’t commit the blunder of adding your medical bills to your credit cards as this will not be a wise financial step for you.

Cleaning up your debt requires self control and time but the mistakes that are mentioned above should be avoided in future. There are practically no reasons behind calling cards as debt generators; you just need to know how you should handle them. To learn more on the different debt relief options, you need to enhance your knowledge on debt repayment.

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