Many students or Millennials are a huge fan of their plastics these days. For many of them, random usage of credit cards has become a habit to survive in their life. Many of you now prefer to carry a wallet full of plastics instead of cash. Though some mid-20s or early 30s are responsible and know how to use their plastics wisely. But there are many beginners who are unaware of the negative impact of their wrong deeds. So, millennials who just completed studies or entered in a new work life should pay some special attention while using credit cards. Unless you may find yourself falling into a credit card debt trap in near future. And this financial wreck can create huge mental stress at the initial stage of your career. So, it’s better to be aware of some credit card mistakes which are quite common for Millennials.
8 Credit card mistakes that Millennials usually make
Credit cards are popular because they are easy to use and convenient but there are also many factors you should learn before using credit cards. Especially those who are the mid-20s and want to start their career and also build a good credit history. So, here are some common credit card mistakes that you often commit and shouldn’t repeat anymore.
1. Keeping too many credit cards
One of the most common credit card mistakes that are found in Millennials is keeping too many credit cards. Remember, keeping too many credit cards is not a good sign. Because you can easily make unnecessary expenses using these cards. And thus, you may fall into credit card debt traps in future.
2. Using credit cards for daily items
Millennials are often unaware of the proper use of credit cards. They love to swipe a credit card for each and every purchase to meet regular needs. And this is probably most ruinous financial mistakes. You should follow a realistic budget at your initial age. Thus, you can optimize the excessive usage of your plastics. Because don’t forget that you need to pay your each and every bill on time. If you’re unable to payoff your credit card debts in time, then you have to incur interest charges on that purchase. Remember, credit cards can be used only to meet the emergencies expenses.
3. Signing up for wrong credit card
There are many types of credit card available. They all have their own terms and different features as well. You should go for a card which is good for your purpose and suitable for your financial status. Don’t just go for a credit card for the exciting promotional offers and rewards. You need to read all the terms and conditions carefully and think whether or not the card is worth buying for you. Because there are some hidden terms and charges which are higher than your budget.
4. Overlooking monthly statement
Ignoring monthly bank statements can be dangerous. Because bank statements only show whether on not all the charges are correctly mentioned. Most importantly, it will help you to understand if you’re late on payments. Moreover, in these increasing identity theft possibilities, you should check the statement carefully. So, take the credit card statement seriously and take steps according to the situation. Another most important part is, checking the credit card statement can help you to know whether or not you have exceeded the credit limit. Don’t forget the line “the sooner you do it, the better it is for you”. There is no age of financial learning. If you start practicing some good financial habits you’ll be able to avoid many such financial problems.
5. Not paying bills on time
Once you’re making late payments, you’re actually incurring more debts or may penalize for late payments. In this case, you not only have to make late payment charges, but it has serious negative implications too. It will create bad effects on your credit report and damages your FICO score as well. Having bad credit score can make everything difficult. The lender and insurer can deny approving your loan application. You may get rejected from the good employer as well. So, think about the effects before using your plastics in a wrong way.
6. Paying medical bills using plastics
Medical costs are huge but it will be a blunder if you pay the bills with your plastics. In a case of financial hardship, you need to negotiate in paying your medical bills. It is advisable that you shouldn’t use credit cards to pay the medical bills.
7. Wasting all credit limit
Some credit terms will offer huge credit limits for students. But this doesn’t mean that a student can burn the full credit limit. You should keep in mind that the balance of your credit is below 50%. And if you cross your credit limit your score may get hurt.
8. Taking out cash advances
Cash advances is a very costly thing that you frequently do with a credit card. The fees associated with cash advances are very lofty and the rate of interest is also very high. So, you must avoid this option unless or until there’s an emergency.
Credit cards help a student or a beginner to establish a good credit history. So, if you use your card with much responsibility you may build a good credit score in near future. And a good credit status can make your life smooth after your complete your studies and can move forward towards professional life. So, once you handle your student credit card responsibly things will be more easily and you’ll be able to get a secure financial future with time.