Common Credit Card Mistakes & How To Avoid Them
Credit cards are a useful financial tool that are beneficial in many scenarios. Credit cards are reliable during an emergency but can also help you build credit, finance a big purchase and earn rewards! However, credit card misuse can damage your credit score and lead to debt pile-up. That’s why it’s important to learn about common credit card mistakes and how to avoid them before applying for a credit card.
3 Common Credit Card Mistakes
- Only Making Minimum Payments
When paying a monthly bill on a credit card, you are given two options: pay statement balance, or pay minimum payment. Not paying your bill in full can cause you to fall into debt and rack up unnecessary interest charges. Plus, just paying the minimum can add months to the time it takes you to pay off the debt. Paying off your statement balance in full helps keep you out of debt and on top of your expenses.
- Missing a Payment
Late or missed payments to your credit card, especially after 30 days, can damage your credit score. On top of a reduced credit score, late payments incur late fees or penalty interest rates. As these pile up, it can lead to more debt, making it more difficult to pay off the debt.
- Exceeding Your Credit Limit
Every credit card has what’s called a credit limit. A credit limit is the maximum amount of money you are allowed to spend using your credit card. Maxing out or using almost all of your credit limit is never a good idea. Like many credit card mistakes, it can lead to a lower credit score.
How to Avoid Credit Card Mistakes
Before making bigger purchases on your credit card, develop a payment plan. This ensures you are able to pay for larger expenses on time and avoid accumulating debt.
Always make on-time payments towards your statement balance and avoid only paying the minimum amount each payment period.
To ensure payments are always made on time, consider setting up autopay for your credit card. Or, if autopayments don’t work for you, set alarms and reminders on your phone’s calendar for when your payment is due. This will help you stay on top of your expenses, making timely payments easier.
How Porter Bank Can Help
With over 100 years of banking expertise, Porter Bank is a great source for personal banking services, like credit cards. Porter Bank offers consumer and business credit cards that work best with your lifestyle, spending habits, and financial needs. Contact the Porter Bank team today to set up your credit card and start building credit today. Call them at 219-926-2136 and they will answer all your credit card, and personal banking inquiries.