The High Chance of Credit Card Misuse

First time credit card users usually tend to misuse their credit. They get excited about the privileged that they have using the card. If you are going to get a new credit card, be sure to avoid this scenario. You must learn proper financial or credit card management. You must be very cautious how you spend the money or the credit that your bank is providing you so that you will not have difficulty when it is billing time.

Learn more advice from financial advisors and credit card users:

1. Stop buying non-essential goods

Probably the easiest way that people end up misusing credit cards is by using them to pay for non-essential items and goods such as electronics, meals, entertainment and other things that usually aren’t budgeted for. Only use major credit cards to pay for items that are essential such as gas, utilities, food and other items that you know will definitely spend money for in the absence of credit cards.

2. Not keeping track of current financial needs

Most people’s living expenses increase over time, so you should periodically review your fund amount to make sure it still meets your requirements and goals. If needed, add more money to the account to bring it back in alignment with your current financial situation.

 3. Leave Your Cards at Home

No credit card, no spending, right? Your willpower may not be strong enough to overcome retailers’ million dollar marketing tactics. Carry your credit card only when you’re shopping for a specific purpose — buying groceries (with a list) or purchasing a new appliance. Otherwise, you risk using your credit card to fund unplanned purchases.

4. Maxing Out Your Credit Cards

There is no rule saying that because you have a $10,000 limit on a credit card that you have to spend all of it. In fact, maxing out your credit cards is perhaps one of the worst things you can do. Credit cards, and balances, often come with interest that makes paying off large sums of money harder. Furthermore, when credit cards are maxed out, your credit score will drop, and the more cards that are maxed out, the lower your credit score will plummet. Good credit scores are crucial when applying for loans, waiving certain deposits and adjusting any payment plans. If too many cards are maxed out and continue to be maxed out, credit card issuers may actually close down accounts..

5. Don’t Lend Your Credit Card

When someone else uses your credit card, you have no control over how they use it. Even if that person says they’ll pay your credit card bill, you are ultimately responsible for the charges they make. That means, if they go on a spending spree and refuse to pay up, you’ll have to pay off the balance.

6. Stay Away From Cash Advances

If you’re short on money and you need a temporary fix, pulling cash from your credit card is one of the most expensive borrowing options. That’s because your credit card company will start charging you interest the second it hits your hands, and the rate is usually higher than what you’d pay for purchases. If you can’t pay it back right away, that short-term solution can become a long-term financial problem.

7. Carry a credit card balance for no longer than six months.

Skaggs explains that beyond that point, the compounding of simple interest can produce a very expensive balance to pay off.  If it helps, think of your credit card balance as a snowball that grows larger as it rolls downhill.

8. Manage Your Mail

While it might seem at first like a trivial matter, in many ways your mail is the lifeblood of your business’s finances. This is especially true when you consider that this is primarily where you get both your bills and your bank statements. And in your bank statements will naturally come your credit card statements.

It might seem easier said than done, but you should plan on reviewing your business credit card statements as soon as possible after you receive them. Most business owners and managers put this off, thinking that everything contained in these documents is correct. The trouble is that often it is not, and this could spell bad news for you if they are not. Fortunately, when there is an error, you can normally get it taken care of with a phone call or a visit to your bank.

9. Stop Using Your Card When You’re Coming Close to Your Credit Limit

As soon as you’ve found out that your balance is getting close to your credit card limit, stop using your card until you’ve paid off the balance. Leave it at home, if you must.

10. Pay Your Credit Card in Full Each Month

The best way to keep your credit utilization ratio low and avoid costly interest charges is to pay your credit card balance in full each month. An effective spend-control strategy involves not spending more than you can comfortably pay down each month — you’ll reduce your likelihood of developing persistent credit card debt.


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