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First Time Credit Card User? 5 Things To Avoid

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The easiest way to create a good credit background is to get a credit card and use it correctly. The key phrase here is “use it correctly.” 

High card debt, skipping payments, and crippling your credit score when you get your first card, is very easy occurrences for the careless person. First-time users with a card often slip into the same traps. So make sure you don’t, stop such mistakes that people sometimes make when they get a credit card for the first time

Racking up debt you can’t pay off monthly

Atiya Brown, a certified public accountant, based in Orlando, Florida, and host of the Live Financially Savvy show, said she is dealing with several customers who are still paying off credit card debt they picked up in college. That’s because as college students, many misuse their first credit cards, often buying items they wouldn’t normally have if they only had cash to spend. 

It’s easy for students to accumulate enough credit card debt through their free-spending ways and bring a balance at the end of each month. This debt is rising exponentially, thanks to the high-interest rates that come with cards. Avoid this; be prudent!

Making only the minimum monthly payment

It’s true that paying your credit card’s minimum monthly payment would not cause your credit score to drop. Yet paying just the minimum is a perfect way to raise your credit card debt over time and hurt your credit score as your balance soar. That’s because spending the minimum just does nothing to reduce the credit card balance total. This could take you years and hundreds of millions in interest to pay off your loan by making just the minimum contribution, based on how much debt you’ve built up. Pay as much above the minimum as you can monthly.

Treating credit cards as free money

When people rely on cash to make transactions, consumption is inherently limited as you have o buy only what your cash at hand covers. They will not buy more than they can afford, or they’re going to run out of money. Because of this, when using cash, consumers put more thought into any transaction. 

Sadly, that thoughtful preparation sometimes vanishes as they move on to credit cards. Credit card is not free money, and it’s debt. Don’t rack it up!

Missing credit card payments

It is one mistake that will devastate your credit score: either you get too burdened by debt to make the full monthly contribution, or you fail to do it all. A single late payment – more than 30 days after the due date – will cause a credit score to decline by 100 or more points. And for seven years, the missing payment remains a blemish on customer credit records. Pay promptly and regularly.

Just remember: Pay in full with your credit card bill and never spend more than you should. Don’t treat your credit card as free money, and always pay at least your minimum payment.

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