Credit card habits are financial behaviors consumers have developed over time as they develop a deeper dependence on card use. Several factors come into play when you try to pinpoint the origin of such habits as credit card use have already transcended the need for convenience. The economy alone is one great motivator to spend being reliant on the population’s willingness to purchase.
The financial industry in itself has also encouraged people to borrow upfront for purchases they have yet to afford. It has propagated the belief that it is acceptable in modern society to borrow money and just simply pay back the amount with interest. This is not entirely a bad thing as it affords people homes, vehicles and even businesses that can help increase their net income.
However, there are consumers who seem to be misusing credit and in the process, developed questionable credit card habits. There are even some who are quick to point out that men handle credit cards better than women but regardless of who is better in handling money, there is still a good number of consumers who are in the red due to mishandling their credit cards.
Credit cards are one tricky piece of financial credit extended to consumers for their personal, and even business use. The problem is that a lot of people believe that the credit limit on the card is money which they have and can spend. That is actually an amount the lender is willing to loan to a person provided they pay it back within a month. Paying just a portion of it can lead to multiple fees and charges that can increase the debt.
Credit card habits which lead to disaster
That is not the only problem of consumers when talking about credit card use. Here are a few more habits that people have developed over time which needs to be addressed and changed.
Taking and showing off pictures of your credit card
Social media has skyrocketed into popularity as one of the main channels for communication but people have been too caught up and sharing more than what they need to show. One of the credit card habits that has to stop is people taking and sharing photos of their credit card to their network. The problem with this is that the numbers on the card serve as its identity. When other people, especially crooks, and criminals get their hands on it, they can use them to buy items and charge it to the card. It is important that people be aware of these things especially as Nasdaq.com shares that the US accounts for almost 50% of card fraud in the world.
Card balance equates to credit building opportunities
No. Carrying a balance on your credit card does not help you with your credit score. What can help you manage and improve your credit score is when you use your credit card, you pay it off in a timely manner. The myth that carrying a balance helps your score could have started from people using their cards to repair their score. Using the credit card to buy and purchase can help improve our score but you need to pay that amount right away so it would reflect on your report.
Paying late for a card bill
You should never send in a late payment on your card especially if you have the means to pay on time. There are unforeseen circumstances that can make you miss your due date but this should be more of an exception rather than the rule. If you keep missing your payment date because you are too busy then you might want to look into automating your payments. This is helpful especially when you regularly charge a recurring expense. You can also set up alerts to help remind you of a pending payment.
Browsing through your statement
One of the worst credit card habits people have developed over the years is simply scanning or worse, not even looking at their credit card statement. This could work if you did not really use it and opt for cash payments for the month. However, it is still a good habit to read over your monthly statement. Apart from looking at the total amount due, minimum payment amount and even the due date, it could include important notices from your lender which can range from promos or even changes in your payment details.
Not taking advantage of your rewards program
One of the things that set lenders apart aside from competitive rates is their rewards system. If you have no idea what yours is then you are already looking at the problem. One of the worst credit card habits you could ever develop is turning a blind eye to what could possibly be savings on your part. Your credit card lender has a specific set of rewards that they offer customers based on their card usage. Take a look into this because you might already be throwing away free money or products.
Letting your server take your card
At one point, you or you know someone who has made this mistake. Dining out and paying with a credit card usually, means you hand it over to your server secured with the fact that you put it snugly inside that black book. Scrupulous individuals only need a few seconds to skim your card, make a copy of the valuable details inside and use it or sell it to other people. Be very careful and keep an eye out on where they bring your card. Better yet, look for restaurants that provide mobile terminals so they can process your payment in your table without leaving with your credit card. ATMmarketplace.com shares that there is about $2 billion worth of ATM losses in the world and a staggering 98% comes from skimming.
Entrusting your children with your card
You might be starting to train your child how to manage finances but giving them access to thousands of dollars worth of credit might be a little too much. It could lead to unbearable temptation where if they give in could mean disaster on your part. It can drain your reserve funds if you have any and take you months to repair your credit score. Why not look into debit cards for your kids so they only get to spend a definite amount of money to begin their financial training? That is better than losing your mind trying to explain to your lender how you spent hundreds of dollars for in-game application purchases.
Mind your cash advance
Rule of thumb is never put your credit card inside an ATM machine because it usually leads to trouble. Taking out a cash advance is never a good idea and needs to be at the very bottom of your financial options when push comes to shove. This option can really put you in the red and put a dent on your finances and needs to be part of credit card basics.
Credit limit challenge
Thinking that your credit limit is a ceiling worth reaching for can land you in hot waters. For one, you would be putting an unnecessary strain on your finances. You are also putting a serious risk on your credit score because of your credit utilization ratio. Nerdwallet.com explains that your ratio has to be as low as possible so it would not adversely affect your credit report.
There are a number of credit card habits that you should avoid if you want to manage your finances better. Falling into these traps can make it even more challenging on your part to realize your financial goals.