Now, some credit mistakes are obvious. Failing to pay bills on time is quite possibly the first thing that comes to mind when credit is mentioned. While this is the easiest and most common way to ruin your credit reputation, there are bigger issues in the scheme of things.
Multiple Cards
There is no situation which should lead to someone having more than two credit cards. The dual functions of many cards these days mean that they are not only debit devices but also allow purchases in at least two currencies, the Jamaican and the US dollar. Card holders are therefore encouraged to resist the temptation of becoming a collector of cards. Imagine, if each card has a minimum interest rate of 4% per month and you have at least five cards, based on the credit limit on each card, you could end up paying quite a hefty chunk in minimum payments. Avoid the unnecessary debt and stick to the minimum that suits your financial requirements.Avoid the unnecessary debt and stick to the minimum that suits your financial requirements
Cash Advances
Under no circumstance should a cash advance be taken unless it is totally and completely unavoidable. Cash advances are extremely expensive and are sometimes up to 15% higher than the rate on your card. Try instead to get a personal loan from your bank, credit union or family member.
Minimum Payments
The two most important concepts here are ‘time’ and ‘interest’. When minimum payments only are made, it takes a longer time to pay off the card’s balance but more importantly, it increases the amount of interest to be paid. A rule of thumb in managing credit cards is to not spend more than you can pay at the end of the month and always strive to pay off the total balance.A rule of thumb in managing credit cards is to not spend more than you can pay at the end of the month.
Paying Off Your Credit Card
This may sound a little strange. Imagine after labouring to pay off that credit card balance that you have been carrying for five years, only to be told, you really shouldn’t have. As confusing as that may sound, what you in effect would have done was to dispose of five years of your credit history which includes your payment patterns and your debt service ratios. You would also reduce your available credit line. Experts suggest that instead of closing the card, pay down and keep it for emergencies only. It is also suggested that when disposing of cards, close your most recent account(s) and keep the one with the longest history.
Are you guilty of making any of these mistakes?
Share this post:
Now, some credit mistakes are obvious. Failing to pay bills on time is quite possibly the first thing that comes to mind when credit is mentioned. While this is the easiest and most common way to ruin your credit reputation, there are bigger issues in the scheme of things.
Multiple Cards
There is no situation which should lead to someone having more than two credit cards. The dual functions of many cards these days mean that they are not only debit devices but also allow purchases in at least two currencies, the Jamaican and the US dollar. Card holders are therefore encouraged to resist the temptation of becoming a collector of cards. Imagine, if each card has a minimum interest rate of 4% per month and you have at least five cards, based on the credit limit on each card, you could end up paying quite a hefty chunk in minimum payments. Avoid the unnecessary debt and stick to the minimum that suits your financial requirements.Avoid the unnecessary debt and stick to the minimum that suits your financial requirements
Cash Advances
Under no circumstance should a cash advance be taken unless it is totally and completely unavoidable. Cash advances are extremely expensive and are sometimes up to 15% higher than the rate on your card. Try instead to get a personal loan from your bank, credit union or family member.
Minimum Payments
The two most important concepts here are ‘time’ and ‘interest’. When minimum payments only are made, it takes a longer time to pay off the card’s balance but more importantly, it increases the amount of interest to be paid. A rule of thumb in managing credit cards is to not spend more than you can pay at the end of the month and always strive to pay off the total balance.A rule of thumb in managing credit cards is to not spend more than you can pay at the end of the month.
Paying Off Your Credit Card
This may sound a little strange. Imagine after labouring to pay off that credit card balance that you have been carrying for five years, only to be told, you really shouldn’t have. As confusing as that may sound, what you in effect would have done was to dispose of five years of your credit history which includes your payment patterns and your debt service ratios. You would also reduce your available credit line. Experts suggest that instead of closing the card, pay down and keep it for emergencies only. It is also suggested that when disposing of cards, close your most recent account(s) and keep the one with the longest history.
Are you guilty of making any of these mistakes?
Share this post: