One of the primary culprits that affects your credit score is bad credit habits. In the worst-case scenario, these bad practices will lead you into a huge pile of debt and a lot more financial problems. Before you know it, you’re stuck in a critical situation that’s hard to escape.
To avoid such financial dilemmas, you should keep your credit score as healthy as you can. To do so, here are some of the unhealthy credit card habits that you should avoid.
Unable to Fully Read and Understand Credit Card Statements
A credit card statement is a run-through of how you’ve used your card for a billing period. It contains digits and percentages that calculate your credit card balances. With all these terrifying numbers, some credit card users don’t take much time to read and understand their credit card statements fully.
Perhaps they don’t know that reviewing credit card records is one of the best ways to discover billing errors and unauthorized charges. With that said, don’t just check your credit card balance and payment details as soon as you get the report.
Instead, review your record to confirm your account’s activities. If you have noticed any errors, be sure to report them to your credit card issuer right away to avoid being held accountable for charges you didn’t make.
Thus, if you are one of the people who only skims to get a general overview of their credit card records, you should stop doing so. Otherwise, you may end up with more credit card debt than you can handle.
Making the Minimum Payment on Your Credit Card Balance
There’s nothing wrong about making only the minimum payment on your credit card. However, making it a habit can cost you in interest and inflate your balance. Also, paying just the minimum every month can damage your credit by building up your credit utilization.
Credit utilization measures the amount of available credit you’re using and is an essential factor in your credit score. It is determined by dividing your credit balance by your credit limit. The higher this percentage is, the more significant the negative impact.
Thus, it would be best to keep your credit utilization less than 30% to avoid hurting your credit score. One way to achieve this is to make payments more than the minimum if you can or at least pay the required amount to pay off your outstanding balance in 36 months.
Missing Payments on Due Dates
With busy schedules, you might forget about making credit card payments on time, especially if you have multiple credit accounts. However, you should know that missing payments by just a couple of days can result in a late fee and additional charges.
While it won’t damage your credit in the first few days, not paying it for more than 30 days will negatively affect your credit score. Furthermore, it’ll worsen if you missed making payments for your credit card bills for 60 to 90 days or more.
On top of that, a late payment can stay on your credit report for up to seven years and could hurt your credit score as long as it’s there. If you want to avoid this circumstance, it’s best to set up reminders or opt for automatic payments to make sure you won’t forget to pay your credit card bills on time.
Not Keeping Your Receipts
Another unhealthy credit habit that you should break is not keeping your receipts. Why? Because if you don’t keep your vouchers, you can’t match them with your credit card statement. To determine whether your record is all good or you’ve been charged for something you didn’t purchase.
Hence, your receipts are essential in filing for a chargeback with your bank if you noticed any disputes. If you haven’t kept them, it can be difficult to justify your claims and point out your credit card statement errors.
Constantly Transferring Balances to Avoid Payments
One of the most effective strategies to pay off debts with high-interest rates is by taking a balance transfer promotion. It’s about moving your credit card’s balance to another card with a lower interest rate.
However, if you’re constantly transferring your balances to avoid paying your outstanding credit card bills, you’re creating a bad habit that could break your credits in the long run. Basically, balance transfer involves fees added to your overall balance if you’re never making payments toward the transaction. Moreover, if you’re using the card with balance transfer promotion for your purchases, you’re making the problem worse.
If you’re making any of the bad credit habits mentioned above, turn these bad practices into healthy financial habits! The sooner you break these unhealthy patterns, the easier it is for you to get back on track and think of ways to improve your credit score as well as your entire financial situation.
Here at Republic Wireless, we are always looking to provide up-to date financial tips and tricks. Be sure to read more on our blog in all things financial wellness.