5 Credit Card Mistakes Newbies Make

It is said that common sense is seldom common practice and these mistakes, unfortunately, prove that.

credit card mistakes

When you’re young, you think the life is forever; but as we know it — that is not the case. The fact that you/we are still exploring the world, leads many of us to make some stupid mistakes.

The situation is the same in many aspects of life, credit card use being one of them. And yet again, we at Wallet Weekly want to help. Here are 5 credit card mistakes young people make; go through the list, and make sure you act smarter…

1. Making only the minimum payments

This is what your bank / credit company loves the most; it wants to keep you in debt as long as possible. And if you’re only making minimum payments that will be the case — you will be their ideal customer. But does that work for you?

After doing this for some time (paying only the minimums), you’ll end up in a hole that will require a ton of time and discipline to get yourself out of. In contrast, if you were to discipline yourself, you could be growing your credit score and eventually be able to get one of those fancy rewards credit cards that offer valuable points for every dollar spent.

2. Paying late

Worse yet, you couldn’t pay even the minimum on time. Or paid more than minimum (preferably) but at a later date. This could have an immediate (bad) effect to your credit score so by all means pay what you owe on time.

If the payment schedule doesn’t work for you, see if you can change the due date — cause these days, you can do that. In most cases, there’s an option to change the date online; if that can’t be done, you’ll have to call or visit your credit card company. They too want you to pay on time.

3. Not paying at all

Here’s where the situation gets even more complicated. Not paying on time is bad enough, but not paying at all is worse.

Chances are if you haven’t paid what you own on your credit card, your finances are in a mess. You may need some time to get them back in order, and your best bet is to: a) talk to your credit card company to come up with a repayment plan; and b) stop using your credit card (to not get into additional debt).

Once you miss credit card payments for six months, the credit card company will issue what is known as a charge-off — a declaration it considers your credit card debt a loss on its balance sheet. Also by that time, your credit card will stop working and in the meantime – the credit card company will start talking to a collection agency to “deal” with your debt. You will still have to pay what you owe.

In a nutshell, you don’t want to end-up in this situation.

4. Not going through your credit card statements

Today, most of our credit card purchases are protected, but that doesn’t mean we should be careless. And that, unfortunately, is one of the words describing the youth pretty much everywhere.

I don’t want to criticize them from a higher ground, I used to be like that myself. I have seldom read my credit card statements — why bother when you have so many other things to do.

But those statements shouldn’t be taken for granted. By going through them once a month, you get to know where your money goes, and detect a fraud. Someone could be ordering something online using your credit card number — and if that’s the case, you must take action to get your money back. Without reporting it, you will be left without that money.

5. Closing unused cards

Another mistake I made — I closed my student credit card and have therefore had to work much longer to reach the “excellent” credit score (which, I’m proud to say, have these days). This is because the average age of your (credit card) accounts is an important factor for determining your credit score.

So don’t do it. Keep those accounts open and see with your bank / credit card company whether you could replace that student card with some better card that offers some additional bells and whistles. Nothing to lose here, and much to gain.

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