Dumbest Things People Do With Credit Cards

As our economy appears to be passing through some of the darkest times since the 1929 stock market crash, almost all of us are faced with juggling our assets and liabilities. Unfortunately some of us may make some pretty dire mistakes with our credit cards. These mistakes can only harm us in the long-run. Try to avoid them.

Taking cash advances to make ends meet. The interest rate on cash advance balances is often astronomical compared to your regular interest rate. You may notice that your payments are applied in a way that makes it difficult to pay off the cash advance balance without paying off the whole card.

Using credit card “checks” to pay bills. Be real careful about those checks your creditors send you from time to time. The temporary interest rate seems appealing but what will it be when the trial period runs out? Also there are transaction fees associated with those checks that may significantly offset the discounted rates on offer. Read the fine print and ask questions before using them.

Borrowing from one card to pay another. This is a bad sign and if you are doing this you need to see a credit professional pronto. Borrowing from one credit card, whether using a credit card check or getting a cash advance, to pay another is like paying compounded interest on the same debt twice. Your debt moves from creditor to creditor but at an ultimately much higher rate.

Making partial payments. If your payment is even one dollar short of the minimum, your credit card company will consider your account delinquent. Creditors do not consider your effort or sacrifice in sending as much as you could. It was still not enough. Late fees will apply and you if you don’t catch up before the next statement is printed, your delinquency will show up on your credit report.

Paying just a few days late. Your creditor isn’t looking at the postmark on your payment. If your payment doesn’t arrive and post on time, you are late. Fees apply. Let the account go more than 30 days late and you are looking at remarks on your credit report for seven years. Paying late may also come with other penalties such as reduced credit limits and higher interest rates on existing balances.

If you are already on a credit card treadmill, the faulting economy may well be the proverbial straw to break the camel’s back. Seek help from a certified financial counselor. The National Foundation for Counseling can put you in contact with a reputable nearby counselor. Ask the counselor to explain all your options and the consequences of each before you decide.

Joseph Onesta is a speaker and consultant with Integrity HPI. As former Director of Education and Training at Consumer Credit Counseling Service of Los Angeles, he authored a personal finance certificate course and has helped tens of thousands of individuals and family along the road to financial wellbeing. Visit his website at www.integrityhpi.com for more information and to subscribe to his free Balanced Life Tips e-newsletter.