A new year means a new chance to evaluate your personal finances, and that includes your credit card behaviour. It's easy to fall victim to credit card mistakes, so be sure to avoid the following at all costs.
1. Opening too many store credit cards
When you shop in person and go to checkout, you may be offered a store credit card frequently. The individual asking usually tries to persuade you with a discount on your current purchase.
You may be enticed to get a store credit card in order to not only receive a discount, but also earn rewards on your future purchases. However, keep in mind that store credit cards have a bad reputation for charging high interest rates, so carrying a balance could be expensive.
2. Applying for too many credit cards at once
Adding a few new credit cards to your personal mix may appear to be a good idea before the start of a new year. However, applying for many new cards at once might actually harm your credit score, making it more difficult to obtain loans or qualify for superior offers in the future.
Each time you apply for a new credit card, the lender does a hard inquiry on your credit report. A single hard inquiry won't have much of an impact. However, if you apply for three new credit cards in the same month, your score will suffer significantly.
Plus, if you have short-term plans to apply for a larger loan, like a mortgage, those credit card applications might be seen as an indicator. A mortgage institution may question why you require so much money all of a sudden and may prevent you from obtaining a loan.
3. Not tracking your weekly spending
When you pay for items in cash, you may recall handing over fistfuls of money to a succession of shop cashiers. However, when you utilize your credit cards, it's easy to forget how much money you've already spent.
Checking your credit card balances once a week is usually a smart idea. It's especially wise to do so when your expenses are expected to rise, such as when you're on vacation. If you don't conduct this checkup, you could wind up with a sequence of higher balances than you can manage, along with a mountain of post-vacation debt.
4. Forgetting about your existing credit card rewards
You may have credit card rewards that you can use to cover part or all of your purchases. Take a look at what rewards you've accrued and how to put them to good use before going out and spending your own money.
It's fairly typical for customers to use credit cards while making their purchases. If you're going down the same road, make every effort to avoid these blunders so that you can start the year on a good financial note.