A credit card provides you with the luxury of spending now and repaying later, and that is why some new credit card holders fail to control their spending and end up in a never ending debt cycle.
Delayed repayments can ruin your credit score while you’re just using your first card. Fist time card users are usually the ones which end up making some common mistakes that cost them later on, so, you can try and avoid these mistakes mentioned below.
Borrowing Too Much
Many people, when they get their first credit card (mostly in college), fail to control their spending habits and end up borrowing too much money that they struggle to pay it off later on.
The main problem with a credit card is that it doesn’t have a limit on how you spend, and allows you to spend blindly on things you won’t otherwise buy. Especially the students that get their first card are the victims of this mistake, they often rack up too much debt, and end up in a debt cycle that is very difficult to get out of.
Mismanaging The Monthly Payments
While having a huge debt on your shoulders, the last thing you need is mismanaging your monthly payments. Mismanagement usually means making only the minimum monthly payments. Doing that can cause your debt to soar up over time, you’d also have to a pay a large amount in terms of interest rate if you delay the monthly payments.
One advice is that you’d never borrow more than your monthly spending budget, and secondly, make as much monthly payments as you can to avoid the interest from adding up.
Missing The Payments
Missing their monthly credit card payments is another mistake that many first time credit card holders make. Keep in mind that a delayed monthly payment can remain on your credit report for 7 years, and it can cause your credit points to drop down pretty quickly.
Some people transfer money from credit card to debit card to pay the interest only on one payment instead of paying interest for multiple payments. This is a good technique to save up on your interest rate.