Credit Card Habits to Avoid At All TimesDecember 28, 2010 - 8:59 am
You have a plastic card in your wallet with a sizable credit limit. It can be a good feeling of security knowing you have a financial back up for emergencies or a method for gaining incentives for using your card as you normally do. There are many benefits for having a credit card but there are also many pitfalls for credit cards if you are not careful.
Here are some tips for avoiding the bad credit card habits typical of consumers:
Avoid the Overspend Temptation
The biggest mistake that has left credit card holders in serious financial trouble is the temptation to overspend. Consumers who consider their credit cards limits as an extension of their income are likely to fall victim to temptation. That temptation leaves many to overspend. When the bill comes in at the end of the month, they have no reasonable plan for paying off the balance in full. That leaves interest charges accruing and as a result, consumers have even more debts to pay. It is a vicious cycle that must be broken or the card holder should not permit themselves to use their credit cards again until they can create a system of financial responsibility.
Failure to Plan
The best way to manage credit card spending is to only purchase on credit what you can afford to pay in cash. As a smart spender, you should be putting aside the cash value of your credit purchases to ensure you can pay off the balance at the end of the billing cycle. Without a reasonable plan to resolve the debts you create, you are only adding to the burden on your finances. Your monthly budget is a main component of your planning strategy. Without a budget you are only guessing about your finances and not really understanding them.
Leave Cards At Home
A credit card used as an emergency back up s a good and reasonable financial plan. If you feel you have any temptation issues to work through when you go out shopping, it is best to leave your credit card at home. Impulse shopping is a big problem for many account holders. The ease of charging an impulse buy on credit is all too easy for some people. Limit your own access to your credit card if you don’t trust yourself.
Failure to Confirm
Each month you get a credit card statement whether in the mail or electronically, you should sit and go through each line of charges to be sure they are all authorized. Few consumers realize that con artists using credit cards fraudulently are more apt to make smaller, more unrecognizable purchases on an ongoing basis rather than one large obvious one. If you are not tracking purchases through your monthly statements, you may very well be paying more for someone else. You may not even realize someone accessed your credit card account until the charges begin to really add up.
As a cardholder you have an obligation to the credit card company and yourself to utilize credit cards effectively and within reason. Credit cards do have incentives that are beneficial to the card holder but the pitfalls when cards are used improperly can carry much more weight that the benefits.