There are hundreds of ways to make financial mistakes, but some of them will cost you much more than others. Certain financial mistakes can take years to correct and cost you thousands of dollars in fees and interest to repair. Avoiding these mistakes entirely is the easiest way to steer clear of financial disaster, so it is important to be vigilant at all times and not take careless actions that could harm your finances. Here are some of the most costly financial mistakes you can make.
Making Payments Late
Neglecting to make the payments on your credit accounts on time can be a very expensive mistake. If the payment is made late, there are a number of consequences that will generally occur. A late payment fee will be added to the balance of the account, increasing the amount that is subjected to interest charges. The interest rate for the credit account will rise significantly, often jumping to above 20%, considerably increasing the amount you have to pay on the funds borrowed. You credit score will also be affected, dropping with each late payment made. Try your best to make all of your payments for your credit accounts on time and cut your expenses if you are having trouble making the payments.
Charging Too Much To Credit Cards
Using your credit cards too freely can result in large amounts of debt that can be very difficult to pay off. Each month that a balance is carried on a credit card, you are paying a considerable amount of interest to the issuing company for the privilege of borrowing money through the credit card. Credit cards should only be used for emergency situations and you should try to pay off the balance of the account as quickly as possible to limit the amount of interest you end up paying on your purchases.
Applying For Too Many Credit Cards
Applying for too many credit cards can hurt your finances in a number of ways. The more credit cards you carry, the more inclined you may be to use them for costly impulse buying. Applying for new credit all of the time also creates the appearance that you are someone who, in theory, could get much deeper in debt so lenders will generally offer you a smaller or costlier loan than you would have otherwise qualified for. Bad reasons for applying for a credit card include offers for free items like a free T-shirt or Frisbee, a small percentage off of your first purchase, or a very short grace period on your initial purchases.