Money Mechanics Blog

Do you have a not-so-great relationship with your credit card? Maybe you don’t pay off your balance each month, or maybe you even miss payments. Let’s take a look at some unhealthy habits you should try to reverse.

Not Keeping Track of Your Spending

A credit card is not free money, you have to pay it back! Keep track of your monthly spending, and make sure you don’t spend more than you can pay off. Some credit cards will offer payment plans on large purchases, which are great for when you have to make an unexpected large purchase, but try not to go overboard each month on what you spend. Interest fees pile up quick on unpaid balances.

Not Paying More Than the Minimum Payment

Paying the minimum payment each month is great, but you really need to pay off the full statement balance. The less you pay each month, the more interest you accrue, and interest rates on credit cards can be up to 30% or even higher! The less you pay now, the more you’ll have to pay later, so pay as much as you can each month.

Missing Payments

Did you know that if you miss a credit card payment, you could pay a late fee of up to $40? Paying at least the minimum payment can help you avoid a late fee. If your credit card balance goes more than 30 days past due, your credit score will also take a hit, so be sure to not miss payments.

Carrying a Balance

Credit utilization is one of the major factors that can impact your credit score. Even if you pay off your entire balance each month, try not to use more than 30% of your credit limit. For example, if your credit limit is $10,000, and you use $7,500 of that limit each month, that’s a 75% usage of your credit, and will negatively affect your credit score.

These are just a few things you should consider when opening a credit card, or changing the way you use your credit card. Looking for a great card from your credit union? Allegius has just what you need.