Common Credit Card Mistakes
Excessive credit card debt is one of the most common reasons people choose to file for bankruptcy in Utah. The majority of Americans have at least 1 credit card and make mistakes in the way they manage their credit card and the purchases they make on that card. Avoiding some of these common mistakes can help save you from having to file Chapter 7 bankruptcy. This article described a handful of the most common credit card mistakes and how to avoid them so that you and your family are not faced with a mountain of a Visa or Amex bill you can never get out from under.
Mistake #1: Not Paying Your Bill On Time
This is a no brainer right? While this seems to be a little more than obvious, the truth is that the number 1 reason why individuals get into trouble with credit cards is because they don’t pay their bill on time thinking a small interest charge is no big deal. The worst part about it is that many people have the ability to pay their bill each month, they just choose not to. Others don’t monitor their card close enough to know when their bill is due. While some credit cards offer not interest for a certain period of time, chances are the interest that is compounding on your card when you go a month or two without paying can be significant. Remember a credit card doesn’t cost you a thing so long as you pay it off each month.
Mistake #2: Just Paying the Minimum Monthly
Don’t do it. Simply put don’t ever charge a credit card if you cannot pay it off at the end of each month. Paying the monthly minimum will suck you dry in interest and you will pay for years without ever actually paying off your balance. This mistake could easily be number 1. Many of our clients tell us horror stories about how long they have been paying the monthly minimum and how much interest has been paid while very little if any premium.
Mistake #3: Maxing it Out
Many people do not realize that maxing out your credit card can actually hurt your credit score. When you have a high balance in relation to your limit, it doesn’t look good and potential lenders take note. For the best credit situation with your card, make sure you do not keep an outstanding balance above 30%.
Mistake #4: Focusing on Rewards Not Balance
Most credit cards these days come with some type of rewards program to incentivize card holders to spend. This is a trap. We are not saying do not get cards with rewards programs. What we are saying is that you should never spend just to get a reward. Those sky miles may sound really great, and that vacation or cruise would be nice, but trust us. You are better off just paying for such rewards then you ever would be racking up debt just to get a little freebie at the end of it.
Mistake #5: Rolling It Over
What do we mean by rolling it over? We mean rolling one card with a lower limit onto a new card with a higher one. We have talked to clients who have rolled it over so many times they end up with $100k in a final credit card bill. Stay away from offers which do nothing more than give you more credit on a new card when you can’t even get current on your priors.
Call Salcido Law Firm
If you find yourself in a mess by making common credit card mistakes such as those described above, there is a light at the end of the tunnel. Call Salcido Law Firm today to consider your bankruptcy or other options. A Utah Bankruptcy Attorney at our office is standing by.