Common Mistakes People Make When Using Credit Cards
Credit cards are considered convenient when making online payments and are also sometimes preferred to cash when purchasing products in-store. However, apart from the annual service charges, credit cards also have high-interest rates for borrowing.
High-interest rates could mean that your debt soon spirals out of hand if you regularly exceed your credit limit. Besides, defaulting on repayments will adversely impact your credit card balance and payment history, which will, in turn, affect your credit score.
To help you avoid making some basic financial errors that could prove to be costly, Financial Hardship Associates Inc. has put together a list of the most common mistakes people make when using credit cards.
1. Only making minimum payments
People make this mistake as they procrastinate over the problem, which only makes the debt worse. To overcome this problem, you should come up with a plan and a timeline to pay off your debt efficiently.
2. Not understanding interest rates
A lack of financial literacy means that many people do not understand interest rates. They get caught up in the present, without realizing that things become more expensive in the long run as the interest builds. To fix this, you should stop using cards, and pay as much as possible towards the principle.
3. Getting caught up in “points” and “free miles”
Nothing is free in this world, but people get sucked into the cycle after seeing their friends and family opt for incentives. People take for granted how much they spend to gain the miles and points in the first place. Remember, that more people lose than win when splurging for extra benefits.
4. Getting too attached
Getting attached to your credit card without weighing up the ramifications will lead to bad financial decisions, and eventually using credit cards to pay for everything will become addictive.
5. Opening a new credit card to pay off an existing one
People often use a new credit card to pay off an existing one, as it may seem like an excellent short term solution. However, in the bigger scheme of things, your debt is building even faster, with mountains of interest accumulating.
6. Getting advice from someone in a similar position
The people who supposedly know all about credit cards tend to be in a bad situation of their own. So if you feel like your credit card debt is getting out of control and you need help, its best to seek professional advice.
To avoid these and other mistakes, reach out to the experts at Financial Hardship Associates Inc. As your friends in finance, we are here to assist you to tackle your debt and set you on a path to financial freedom.
Once you enroll with one of our programs, we will communicate and negotiate with your creditors until all of your debt is paid off.
We serve clients across Miami, Fort Lauderdale, Pompano Beach, Deerfield Beach, Boca Raton, Delray Beach, Lake Worth, Boynton Beach, Greenacres, Lantana, Palm Springs, Royal Palm Beach, Riviera Beach, Palm Beach Gardens, Wellington, West Palm Beach, Palm Beach County, Coral Springs, Jupiter, Plantation, Sunrise, Pembroke Pines, and Tamarac, Florida.