Credit card users, listen up: Being a “good” card user may be even more beneficial to you than to the credit card companies. Avoid these five credit card mistakes to keep your credit score high and your interest payments low!
#1. Paying your bill late
Payment history is the No. 1 most important aspect of your credit score. Always make at least the minimum payment on or before your due date. Even better, pay the entire balance off to avoid paying interest and going into debt. When used properly, credit cards can provide you with a monthlong interest-free loan — take advantage of it!
#2. Not knowing your credit card terms
We take a leap of faith every day when we quickly agree to terms and conditions without reading them, but there’s no excuse for not reading over your important credit terms. If you take a look at your monthly credit card statement, you’ll see the most important consumer disclosures. Here are a few things to pay attention to:
How your payments are applied
How your balance is calculated
How to avoid paying interest
What to do if you find a mistake on your statement
Your rights if dissatisfied with your credit card purchases
By understanding these terms, you can more easily spot mistakes in your credit card bill, as well as articulate any mistakes clearly when speaking to a customer service representative.
#3. Not checking your billing statement for fraudulent charges
Speaking of spotting mistakes, you should go over your billing statement each month to ensure you made all of the purchases listed. You may think everything is correct because your credit card is still in your possession, but the information could have been stolen to make fraudulent purchases, or you may have been overcharged for purchases made. To make this process easier, save your receipts and use them to verify your purchases at the end of the month.
If there are any incorrect line items, follow these instructions to dispute fraudulent charges on your credit card statement. If your card is still in your possession, you won’t be charged anything. If your card has been stolen, the most you’ll be charged is $50.
#4. Maxing out your card (or using a high percentage of your available credit)
Your credit utilization — or percentage of debt balance in relation to available credit — is the second-most-important aspect of your credit score. You should aim to keep this percentage below 30% at all times — including the mid-statement period when possible. Your balance may be reported to the credit bureaus mid-month, showing high utilization even when you pay it off in full each month. To remedy this, try making payments twice a month — to coincide with your paydays.
#5. Not redeeming your rewards
Many credit cards give you cash or travel rewards for each purchase you make. This is one of the best reasons to put all of your daily expenses on your credit card and pay it off in full each month. But if you aren’t using the rewards, there’s no point in charging everything. If you simply want to build your credit, you can do so by putting minimal purchases on the card each month. Take advantage of your rewards — they are easily the most enjoyable part of credit card usage.
Bottom line: A good credit card user pays his bill on time, knows his rights, checks over his statement, keeps his balance low and redeems his rewards. Avoid the mistakes made by “bad” credit card users — your credit score and wallet will thank you.
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