These TOP 10 Things To NEVER Do With Your Credit Card
Honestly, I just see so many people making this mistake with their credit cards and I just wish that I could stop them before it’s too late hey I’m abhi, and today we are talking about the top 10 things to never do with your credit card.
everyone should know about credit cards before they get their first credit card before they even graduate high school but I’ve also included some higher-level tips so if you already have a few credit cards or know how they work I still think this article could be extremely useful to you so let’s just get right into it the first credit card mistake that people make is paying the minimum balance and even though it’s really clearly written on credit card statements like in bold letters this is how much the minimum payment is this is absolutely not what you want to be paying what most people don’t know is that paying this much will actually cost you a lot of money and banks want you to pay this much because that’s how they get their profit for example if your credit card bill was for ten thousand dollars and your minimum payment was 100 and you were to only make the minimum payments you would still have 9,900 left over on your bill and since you have a balance of 9,900 on a credit card.
the credit card company gets to charge you interest on this in this example you’d be paying almost 200 in interest even though you made the minimum payment don’t make the minimum payments always pay your balance in full this actually leads me to the next thing to never do with a credit card is when paying your bill never pay your bill with another credit card believe it or not you actually can pay a credit card with another credit card this is called a balance transfer and usually balance transfers come with really high fees another way to pay off one credit card with another credit card is actually the third thing you should never do with a credit card and that’s taking it to the atm and getting cash out with your credit card when you do this and when you pull cash out of your credit card you get charged a cash advance fee credit card companies actually hate when you do this because it’s extremely risky for them and so they just charge you a bunch of extra fees for example when you go to the gas station or to the grocery store and use your credit card like you normally would the credit card company can see that you spent 50 bucks on gas or maybe like 200 on groceries they know exactly what your money went to but when you go to an atm and withdraw 200 the credit card company has no idea what you’re actually using that money for and how much of that money you’re using you could be using it to pay off another credit card or a mortgage or an auto loan or really anything else and they would have no idea it’s almost like going to the bank and asking the bank for a loan for 200 or 500 or
How much you get and then just not telling them what it’s for and of course no bank would do this just give you money without knowing what the money is for but credit card companies do this with cash advances and they do it because they get to charge a lot of fees for it the next biggest credit card mistake i see is missing a payment and i mean everyone knows this is bad like that you shouldn’t miss a credit card payment that’s like duh but the reason i wanted to include it on this list is because of why so many people actually do end up missing payments and what you can do to never miss a payment again the real big mistake here is not having credit cards set up for auto payments this means your payment is automatically made on the correct day in full to where you don’t pay any fees you don’t pay any interest and you don’t miss a payment no matter what and setting up auto payments on any of your credit cards is just so easy that it doesn’t make any sense and why you would not want to have it set up so as soon as you get your credit card the first thing you want to do is set up auto payments to where you never miss a payment you never get charged late fees you’re never charged interest and you always make your payments in full on time.
the next biggest mistake which i’m sure we’ve all done at one point or another is to never max out a credit card and there are actually a few reasons for this one and the first one is when you max out your credit card your utilization or how much of that credit card you’re using becomes 100 this negatively affects your credit score and within one month you could see your score drop up to 40 points and the second problem with this is maxing out your credit card can actually put your credit card under review with the credit card company this is where the credit card company looks at your history with that credit card and decides whether they want to take the credit card away from you this is something most people don’t even know exists but it absolutely does happen and just because you qualified for a credit card at some point maybe a year or two ago doesn’t mean you still qualify for that credit card now and the company can just look at it and decide that maybe it doesn’t want to keep allowing you to use this credit card and they’ll close the account they’ll close the card and everything you owe will be due immediately that sounds pretty terrible but even worse than maxing out your credit card is not using it at all because if you just forget about your credit card and don’t use it for a year or two the credit card company can actually close the account without even telling you and this of course will hurt your credit score.
because it’ll close all of the good payment history behind that account as well next since we’re talking about closing accounts you should also never close an account with an annual fee and this is one of the hardest mistakes for me to see other people make because when you close an account without an annual fee you really are just hurting yourself with absolutely nothing to gain i mean that credit card wasn’t doing anything to you it wasn’t charging you a fee it wasn’t charging you interest it wasn’t hurting your credit score and you decide to close it for no reason and then your credit score drops because of it i have no clue why you would do this it doesn’t make any sense at all but i see people do it all the time the next mistake that i see people make is they close a credit card with an annual fee because even if a credit card does have an annual fee it probably still doesn’t make sense to close it and i understand maybe you don’t want to pay the fee every single year but there definitely are ways to get around that one way is to request a downgrade on your credit card many credit cards have free versions that don’t have an annual fee and maybe you’re just missing some of the perks that you currently have for example if i wanted to get rid of my favorite credit card my chase sapphire reserve which charges me an incredible 500 every single year for all the benefits that i received from it i could instead go for the chase freedom unlimited card.
which i also do have in my wallet and the free card will allow me to keep my credit line with my current credit card so i don’t lose any of my history it just downgrades it to where i’m not paying the fee and of course not getting the cool benefits that come with the paid card this means i get to escape an annual fee if i no longer need it or don’t want to pay for it anymore but i still get to keep my credit score intact because i didn’t actually close the credit card and the last thing you should never do with a credit card is co-sign on someone else’s card if someone wants to get a credit card but the bank doesn’t want to give it to them the bank could ask them for a cosigner in which you co-sign for the credit card so that the other person can have the credit card and use it and you should never ever do this it doesn’t matter if they’re related to you or
if they’re a family friend or any other scenario it literally does not matter this is never worth it and if someone comes up to you and tells you that they want you to co-sign for a credit card basically what they’re saying is that the bank did not trust them enough by themselves based on their previous credit history or their missed payments or whatever else about them and since the bank doesn’t trust them they want you to be responsible for paying off the credit card when this irresponsible person doesn’t do so themselves the thing is banks are very good at underwriting loans and determining risk so what they do it’s like how they make money it ain’t nothing but a thang i have no clue why i just said that and when a bank determines someone is not trustworthy with money you have every reason to believe the bank and you should never sign your name on debt or anything that you have to pay for someone else i hope this article has helped you guys out if it did i would greatly appreciate.
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