We all have a credit card (or several) for a variety of reasons. The main one usually is that it’s convenient to put something on plastic. Then, you can pay for it later or in monthly installments. It can make life easier. Yet, in a lot of ways, it can make things more difficult and expensive. It’s a ‘out of sight, out of mind’ sort of situation. This is how so many people find themselves in debt.
They can make purchases on their credit card and not spend a dollar of their own money. When the statement comes, you’ve purchased things you don’t even remember buying. You might find you ate out more often than you normally do. Or you bought things you don’t even need because it was just so easy to swipe and buy.
Having a credit card can really impact our spending habits negatively. Then, when we get the bill, we don’t want to pay for it. So, instead of paying it in full, we pay the minimum balance. What does that ultimately get us? More interest tacked on, costing you even more in the long run. It’s never an easy thing to see.
Let’s look at three ways your credit card is costing you.
1) Making Only Minimum Credit Card Payments
This is one mistake so many people make. They think it’s an easier way to pay off something, but it’s really not. In fact, it can make your credit score drop. Your credit score is usually based upon how much available debt you have. If you’ve maxed out your cards, then your score will drop big time. That also doesn’t include the additional interest that is added on.
2) Risk Making Late Payments
Just like with any other bill, you’ll have to make at least the minimum payment monthly. If you can’t or don’t make that payment, it won’t be good for you. You will most likely face a hefty late-payment fee. If you don’t pay within 60 days, you can be slapped with a 30% charge. Not to mention, your credit score will go down.
3) Taking Out Cash Advances
Your credit card company may provide you with the option of taking out a cash advance. It can be good on the rough occasion you’re waiting to get paid. The problem is, this advance will cost you a lot. They can charge you an additional 5% or more than what you’re taking out. Plus, cash advances pay out much higher interest.
