Credit card abuse is a quick path to financial distress. Being late on just one payment or going over your credit limit just a few dollars can enact fees and penalties that can set you back regarding balance repayment. And these dings on your credit report can lower your credit score.
Here are some credit card tips to help you avoid situations that hurt your credit:
Stick to your budget. A low-balance credit card with a high spending limit sitting in your wallet can tempt an unplanned purchase. If your budget calls for $100 for clothes shopping, consider leaving the plastic at home and shopping with cash instead.
Pay off your balances each month. Paying just the minimum amount can cost you hundreds or even thousands of dollars over the life of the loan. Also, consistently paying the minimum is considered a red flag and can trigger an interest rate increase.
Ask your credit card company for a lower interest rate. Your current credit card rate was likely based on your credit worthiness at the time you were approved for the card. Situations change and so can your interest rate.
Read the fine print. Be careful of offers that seem too good to be true. Watch for skyrocketing annual percentage rates after an introductory period. Look for high penalties for missed payments. Your interest rate could default to 35% if you’re careless with your card.
Finally, if you can’t pay off your credit card balance each month, remember that your credit score is more likely to be adversely affected if your balances are above 30% of your spending limit.