Do you use a credit card often? Do you just love it? Well, you may want to be careful, because useful as a credit card might be, if you are not cautious, it could blow up on you at the most inopportune moment. Bank checks online may be something to look into.
When used properly, a credit card can be a great tool for earning rewards and saving yourself the trouble of having to go to the ATM often to withdraw cash. But when not used properly, it is just like a ticking time bomb that will destroy your credit worthiness, and you in the process.
Here are 3 warning signs that your credit card might go ballistic on you –
1. You use balance transfer offers like your personal checking account
Do you respond to every single one of the balance transfer credit card offers? Do you use those little checks to pay off your bills or buy all the things that you always wanted to buy but never had the money for? Do you use it to float your balance because you have been piling on more debt than you can handle?
This is usually the first sign that you need to start taking a deep hard look at your spending habits. Even the most harmless looking 0% APR balance transfers usually carry a balance transfer fee. This is why it’s important to compare your balance transfer options by using a website like creditcard.com.au. In addition if the payment is not made in full by the term specified, the interest rates will sky rocket. In the end you will pay way more than what you borrowed and it will land you in a worse situation than before.
2. You only make minimum payments on your credit cards
Did you know that if you only pay the minimum payments on your credit cards, you could take 10, 15 or more years to pay off even the smallest of the balances? In the meanwhile, you continuously pay interest on the balance, fattening the bottom line of the credit card companies.
If you have the habit of just paying off the minimum each month, stop for a bit and pay attention to the credit card bill which tells you how long you will take to pay off your bills and the amount of interest you pay in that process. And then make it a habit to pay off at least a little bit more than the minimum payment each month. Also, whenever possible, use your bonus checks or gift money to pay off the balance, thereby leaving you with smaller minimum payments and more money left over to pay down the principle each month.
3. You use money from credit cards for risky investments
If you have an entrepreneurial streak, it may seem tempting to charge up the credit card to support your next venture. If you are into investment, you may think it is safe to invest the money from balance transfers into the stock market.
But remember that any time you spend the money from credit cards in non-guaranteed investments – be it an entrepreneurial venture or the stock market or just a loan to a “friend”, you are putting your financial future in dire risk. If any of your investments go belly up, you will be left with a huge debt at probably a large interest rate!
The best way to stay out of credit card trouble is to realize that the money from credit cards is not yours! The credit card companies are in this to make money… don’t be the sucker that they fatten up their profit margins through!