By Manuel Tovar, October 20 – Hispanic Solutions Group
You cannot afford to make these three mistakes with your credit cards, which we will indicate below, in order to safeguard your economy and so that you can better orient yourself in your financial options, Hispanic Solutions Group, always identifying with their smart consumer decisions, today we also support them by teaching them these 3 big mistakes.
Using smart credit cards can help improve your credit score, making future loans easier and cheaper, many cards also offer generous rewards, so you can really earn free rides or even cash back just for your routine daily expenses, the key, however, is that cards are a good thing if used wisely. Unfortunately, they can also be detrimental to your personal finances if you make mistakes using them.
There are three blunders that we should pay attention to and they are:
- Maximize your credit cards
Maximizing your cards means loading up to the limit that the cardholder set for you. For example, if you have a $ 5,000 line of credit and you charge $ 4,999 to your card, you have exhausted your cards. There are a few other reasons why maxing out your credit cards could be a big mistake. You might find yourself with a balance that is really difficult to repay to begin with. But a maxed card can also seriously hurt your credit score.
In fact, using more than 30% of your available credit can lower your score. This is because the credit utilization ratio is one of the most important factors that credit reporting agencies and lenders look at.
Maxing out your card also puts you at risk of over-limit fees if you exceed the amount you are allowed to spend. And you won’t have credit available in case you need it. To avoid this mistake, limit the amount you spend on your cards and stay well below that all-important 30% threshold.
- Paying only the minimum owed
Credit card companies set really low minimum payments. They benefit when you pay only the minimum required because your payment will generally barely cover interest costs. You’ll end up paying off your balance for years and years, and you’ll make little progress on your credit card debt, despite diligently mailing a check every month. Over time, you can end up paying tens of thousands of dollars in unnecessary interest charges.
To avoid this, pay more than the minimum each month. Ideally, the best thing to do is pay your entire balance in full when you receive your statement so you never end up owing any interest. If that’s not possible, send as much as you can with each payment so you can reduce your balance quickly and avoid getting caught in a debt trap where your hard-earned cash is sucked up due to interest charges.
- Missing payments
Finally, when you do not make credit card payments, in most cases you are charged fees. But it will also hurt your credit score. Once a payment is at least 30 days late, the credit card companies will report it to the major credit bureaus. Even a late payment could drastically lower your score, and a history of late payments could make obtaining any type of loan very difficult and expensive. To help avoid this, set up automatic payment if you can. Or, if you’re concerned that your bank account might be overdrawn, set a reminder on your calendar to make sure you pay your bill before the deadline.
If you can avoid late payments, fall into the minimum payment trap, or maximize your cards, you are well on your way to using credit cards successfully to help improve your financial situation.
If you have any questions related to finances, credits and other related topics, but do not know who to turn to, contact us by going to Hispanic Solutions Group, writing to info@hispanicsolutionsgroup.com, by calling 612-216-1599 or accessing financial information on YouTube, The credit channel, Our specialists in charge of Mrs. Jessica Aliaga will be informing you of any concerns about this and other financial matters of general interest and guidance as in this topic, today we bring you the following report so that you can make your most important economic decisions , also him We invite you to follow our social networks: LinkendIn, Facebook, Twitter and Instagram