Whether you just received your first credit card or already have a wallet filled with plastic, it pays to know how to use this convenient credit resource to your advantage. If you’re not careful, though, a credit card can become a huge burden. Fortunately, the most common credit card mistakes are easy to avoid, and at R-G, our card is one of the most consumer-friendly options available.
Paying late
When you pay after a card’s payment due date, the credit card issuer typically charges a late fee averaging up to $36, according to personal finance site Bankrate. If you’re late only once, it’s worth a shot to call the credit card issuer and ask if it can waive the late fee to avoid paying the fee on top of interest. At R-G, this fee can be up to $25.
Making only minimum payments
While paying only the minimum payment amount might seem like a smart money stretching move, those minimum payment amounts benefit the creditor, not the cardholder, who pays interest each month on the balance. Contact us today to see how much you can save by making larger payments.
Carrying the week with cash advances
You’ll typically pay much more than the cash advance amount in fees and interest for that convenience. The credit card company may charge up to $20 or more in upfront fees when you take a cash advance, according to major credit bureau Experian. On top of that fee, you may pay a fee when you withdraw money from the ATM. Cash advances also usually have a higher interest rate — sometimes more than 25% — than regular purchases; that’s not the case at R-G. Our cards charge no cash advance fees.
Maxing cards out
When you get a card with a $5,000 credit limit, staying well under that limit seems easy enough at first. If you’re not careful, however, a few expensive emergencies or repairs can max out a credit card in no time at all. Maxed-out credit cards can hurt your credit utilization rate — the amount of your debt to available revolving credit — which accounts for around 30% of your credit score. Worried that being close to your limit is dragging your score down? Talk to an MSR about options to raise your limit.
Making purchases simply to earn rewards
If you’re gradually racking up rewards points or miles on a credit card with necessary purchases that you try to pay off each month, that’s great. However, if you’re making tons of purchases with the card just to earn rewards without keeping the balance low or paid off, you can end up paying way more in interest than you’ll receive in benefits. Sometimes rewards aren’t for everyone. If you typically carry a balance, consider a low-interest R-G Platinum Visa.
Having too much credit card debt
As obvious as this credit card mistake seems, it’s a rare cardholder who hasn’t had to dig out from under a pile of credit card debt at least once. Instead of being hard on yourself, create a budget to pay off credit card debt and seek credit counseling at a nonprofit credit counseling agency so you don’t fall into that position again. There’s financial education info right on our website under the Manage menu option.
Procrastinating on a balance transfer amount
It can be a smart move to transfer a large balance on a high-interest credit card to an R-G low-interest Visa credit card. That way, you can avoid paying excessive interest while hammering away at the principal faster, maybe even years before you could with a high-interest card.
