Owning credit cards can prove to be an excruciating experience if you are not careful in making purchases. Furthermore, there are fundamental mistakes that you should totally avoid. One of the biggest blunders is to become late in making payments. The end results may be severe such as late payment penalties, higher interest fees and lower credit ratings.
Take a look at the following: If you have an existing APR of 13.2 percent, the late payment can cause the annual percentage rate to increase up to almost 30 percent. This can even grow to three percent of the unsettled balance if you miss two consecutive payments. Late payments that become tardy in one month can upset your credit scores. What is the lesson behind this? See to it that you settle credit card bills on or before due date. You can pay this online for more convenience.
Another mistake is to transfer debt from high interest credit cards to those with lower introductory rates. This seems to make sense financially but ignoring or misinterpreting policies on balance transfers can be detrimental. You owe the credit card company even more. Determine the exact duration of introductory offers. You need to pay off arrears before the APR increases. If not, you will be meted a higher interest rate. At the same time, check if the offer includes a transfer fee.
Using all your available credit balance is a big error. Therefore, monitor your credit use percentage every month. It may be possible to get another card if you consume a large portion of available credit. This is true even if you are not near the threshold. It is advisable not to spend beyond 30 percent of the total limit for revolving credit. Again, this will have a considerable outcome on your score.
Disregarding your monthly statement is another downside to stay away from. Check out your bills carefully to ensure that there are no incorrect charges. You may have been a victim of fraud so it is crucial to detect this earlier. Notify the credit card firm right away if this happens. Furthermore, you will know how long it will take to settle your debts by comprehending the statement. Be aware of the interest charges especially on cash advances. Lending facilities normally allot 45 days for notices before increasing interest rates. Likewise, read the implications of minimum payments. This will help you avoid becoming debt-ridden.
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