Your credit card may be costing you more money than saving it. Maybe, you have received conflicting or incomplete information?
Credit cards are not only a wonderful asset for paying expenses, but they are also great for building credit. Unfortunately, they are often misused and can damage your credit score. This misuse is frequently the result of myths that can end up costing a lot of extra money.
Once you understand these myths, try National Debt Relief to get headed in the right financial direction.
1. There’s nothing wrong with carrying a balance month to month.
Ah, contraire! Carrying a balance on your credit card from month to month is probably one of the biggest credit myths. More than 22 percent of Americans take a balance thinking it will improve their credit score. The truth Is that it hurts your credit score by giving a higher utilization rate, negatively affecting your score. Carrying a balance also costs you more significant interest charges.
2. Making only the minimum payment
Minimum payments are not there to help your credit score. Paying only the minimum allows you to fall into debt at a higher rate, adding months, if not years, to the time it takes you to pay off your debt.
3. Missing a payment
Missed payments or payments that are made more than 30 days late seriously jeopardize your credit score.
In fact, a single payment that is 30 days late can cause a drop in your credit score from 17 to 83 points.
For a payment missed by more than 90 days, a credit score can cause a 27 to 133 point drop in a credit score.
4. Don’t worry about not reviewing your billing statement. They are sure to be accurate.
All billing statements must be reviewed as they are received. This will ensure that all of the information contained is accurate, so action can be taken against fraudsters, and errors are corrected.
5. Don’t worry about fees
Every cardholder signs an agreement with their bank that they are aware of applicable fees on their accounts.
And while these agreements are probably not at the top of anyone’s reading list, it is important that every cardholder understands these charges’ specifics. Be sure to parse through all of the jargon to make sure you know what terms to look for and what they mean. And while the meaning of some terms might be confusing, there are others such as 0% APR that can be very beneficial to cardholders.
6. Taking out a cash advance
Probably one of the most dangerous things any cardholder can do is to take out cash advances on their credit cards. Unknown to many cardholders, interest begins to accrue as soon as the advance is taken out. There is no grace period as there is with other types of purchases. Making matters worse, when a cardholder takes a cash advance out, this usually makes it that much more challenging to meet next month’s obligations, and the next month’s, and the next months, etc. This is one path nobody wants to go down. It’s not a way to get out of trouble. Instead, it is financial slavery.
Credit cards are an excellent method of managing money, but it can also be a slippery slope. Enjoy them, but be careful. By dispelling the myths listed above, you have the chance to use your credit wisely and usefully instead of suffering negative consequences.
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