When cash is tight and unexpected expenses arise, many will turn to the use of credit cards to make ends meet.
Most Common Credit Card Mistakes
Making just the minimum payment on a high interest, high balance credit card can put the debtor in a bind. When paying the minimum, most of the payment will go toward interest, not principal, which will cause the balance to remain stagnant.
As a result of being late on a credit card payment, creditors can charge a late fee, as well as increase one's interest rate. When someone is over 30 days late on a credit card, the credit bureaus are notified, and this may remain on the credit report for a period of seven years.
Having a balance on a credit card greater than 30% of your credit limit can have a negative impact on your credit score. When dealing with a maxed-out card, stop using the card, and do your best to pay the balance in full as quickly as possible to avoid a drop in your credit score.
"The best thing money can buy is financial freedom."
- Rob Berger
Discover the definition of credit card words and phrases in this comprehensive financial directory.