If you own credit cards, you may already feel like the interest rates are too high and the rewards are too low. Can you imagine then, what it's like to be penalized by credit card companies for certain behaviors and therefore become subjected to even higher interest rates and surcharges? We all want to do our best to keep our credit in check and one of the best ways to do so is to avoid the pitfalls that many find themselves in, which can lead to skyrocketing interest rates that hamper your ability to pay debt off in a reasonable amount of time. The following tips will help you avoid these issues and keep your credit card payments reasonable and steady.
Never Go Over Your Limit
It is never a good idea to come anywhere near your credit card's actual limit. Since credit scores are measured in part by the amount of credit available relative to the total amount of credit issued, you can significantly impact your credit score by maxing the cards out. Take it one step further and go over your limit, however, and you will be subject in most cases to a skyrocketing penalty interest rate that will make paying off the balance even more of a burden.
Don't Make Late Payments
While a late payment is better than no payment at all, it doesn't help you keep your interest rates low. Even high-end cards that offer excellent interest rates can see these revoked after making a late payment and can have penalty APRs as high as 30%. Nobody wants to find themselves in a situation like this, so the only way to avoid it is to make sure that the minimum balances are paid in full on your credit card each month. If you still mail in your payments, consider paying on-line to avoid mail delays and possible penalty rates.
No Returned Payments
Finally, making a payment that is returned for insufficient funds can instantly light up your account and make you eligible for penalty rates and provisions. Making a payment that is returned on your credit card can also damage your credit, so always be sure to check your accounts before making a payment; keeping records of what you spend can mitigate these risks. Sometimes we count on our online accounts to display all transactions but sometimes transactions can take days to display. Keep a mental or physical transaction list to avoid ever having a returned payment for anything, especially a credit card.