|your money...||...your future.|
Getting into credit trouble can happen quickly if you aren't careful. By being diligent with your use of credit sources you can avoid getting trapped beneath debt. Diligence isn't always enough, as sometimes debt simply piles on to even careful spenders. There are many common pitfalls that catch credit users frequently.
Cards with fees
Some cards have annual fees, and many cards have fees for late payments among other things. If you aren't aware of potential fees you're facing you might get hit with a bill you aren't expecting or ready to pay.
Cards with high interest rates
Credit is being lent money to be repaid later with interest on top of the principle amount borrowed. The difference is how much each person pays to use that line of credit. Some cards have APR's (Annual Percentage Rate) as low as 9%, but some cards get as high as 30%! By using cards with high interest rates and maintaining balances on them you can rack up thousands of dollars just for the privilege of using that money.
Making late payments
A single late payment is
going to affect your credit score, potentially cost you fees,
and leaves you paying more for interest on money you've already
borrowed. If your credit score drops because of a late
payment, you will also face higher interest rates on loans and
may see your credit cards interest rates rise.
Paying the minimum
Paying only the minimum is
the easiest way to stay in debt for your whole life. If
you can only afford the minimum once in a while it beats missing
the payment altogether, but if you are frequently paying just
the minimum you are likely going to be paying out more in
interest than you did for the money you borrowed.
Having many lines of credit
Having a few credit cards with large limits can quickly become a problem. If you have too many options it can be easy to run high bills on each card and then face a total bill that you can't pay off in any reasonable amount of time. Keeping yourself under control is easier when you limit your credit options, or at least the limits you have on each card.
Over spending ones income
Just because you
have 3 credit cards with $1000 limits doesn't mean you can
or should spend
$3000 in a month. If you can't afford to pay off the
balance at the end of the month, you need to make sure the
purchase is a need, and not a want. If you can't pay it
all off at the end of the month know that you will be paying
interest on that money and it will quickly add up!