Bad Habits in Using Credit Card Will Make You Run in Debt(1)
I’ve just read an article which indicates that buying food with credit card will lead to consumers buying more unhealthy foods such as cakes and cookies. Well, that’s true for me. While I choose to pay with plastic, I’m inclined to buy more things that I may not buy if I use cash. I don’t know if there’s any substantial connection between them, but there’s some difference.
Some people have set their goal as achieving “financial independence”, but if you have to work to support the family as well as paying off the credit card debts, how come you make it? Financial independence is defined as having sufficient personal wealth to live without having to work actively for basic necessities. If you want to be financial independent, you must have to change the way you treat your credit cards.
If you want to use your credit card properly and manage your money, you must correct some habits that lead to debt disaster.
1.Having too many cards in your wallet.
Open up your wallet and check how many credit cards you have. The average number of credit accounts a consumer holds is nine, reports MyFico, the consumer division of Fair Isaac Corp., the company that developed the FICO score. If you keep more cards than necessary on your person, you may have to revise your card-carrying way. In the event of loss or theft, your first task would be to alert all issuing banks before someone else takes them on a shopping spree — which you can’t do with cards you’ve forgotten about.
So, you should only carry the credit cards you really need and use, and eliminate them to the essentials. Actually, most people only need a couple of credit cards on hand, among which there’s one general purpose card that can be used anywhere and a retail card for the store you frequent most.
2.Not checking the credit reports.
Some people don’t like checking their credit reports when they receive them on the billing day. But it is necessary. You should check it for errors. For example, purging your record of inaccuracies can be crucial for getting better interest rates, landing the job you desire and stopping an identity thief from ruining your credit rating. The scores on your credit report also determine how high your interest rates will be on future loans. Dispute anything you think should not be there. The Fair Credit Reporting Act allows for the correction or deletion of inaccurate, outdated or unverifiable information, provided that a reinvestigation into the disputed data sides in your favor.
You can request one free copy from each of the big three credit reporting bureaus, Experian, TransUnion and Equifax, every year. If you do find a mistake, send a correction letter to each of the credit bureaus that show the error. All three allow you to dispute errors online. If you’re not willing or dedicated enough to write those letters and follow up with the credit-reporting agencies, you can pay someone else to do it for you.
Checking your credit report is something that you should do, because errors on your report, such as a payment marked late that came in on time, could raise your interest rates, lower your credit score and affect your ability to obtain credit in the future.
3.Use cash when necessary.
Do you have the habit that keeps swiping your credit cards for just about every financial transaction from groceries to your mortgage? If so, it must be another chance that you are creating an overabundance of unnecessary debt. While one of the primary perks credit cards offer is the ability to delay payment, interest free, for at least a couple of weeks, this inherent convenience can also make them too tempting to lean on.
So, for daily expense, you can choose to use cash or a debit card rather than credit cards. Then you can use the credit cards for pricey-though planned-for-goods and services, such as furniture, vacation, and electonice.
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