Common Credit Card Mistakes

When it comes to money, there are lots of ways to make mistakes. Some of them happen more than others. If you're trying to be a good money manager, you'll want to take note of some of the most common mistakes that people make.

• Having too many credit cards. Most people have far more credit cards than they need. If you're in that situation, try to get down to one or two for emergencies. Having too large of a credit line makes it tempting to get into unnecessary debt.
• Spending to the limit of credit cards. Another problem people have is keeping their credit cards maxed out. If you're reaching the limit of your card, stop using it and work to pay it off. Using the maximum of your credit limit has a negative impact on your credit score.
• Going over the limit. Going over your credit limit can cost you a lot. Credit card companies charge from $25-30 in over the limit fees. That can mean over $300 a year in fees if you go over your limit every month.
• Paying the minimum payment. If you pay only the minimum payment it will take as many as 10 years to pay your card off. That means paying hundreds, even thousands of dollars in interest charges.
• Keeping cards with high interest rates. If you have an interest rate upwards of 10%, try shopping around for lower rates. It could save you a ton of money in interest rate charges.
• Making Late Payments. It may seem like common sense, but paying your bills on time can mean big money savings. Credit card companies charge as much as $30 for late payments.
• Making unnecessary purchases. Most people put unnecessary expenses on their credit cards. Instead of saving up for a big vacation, they'll just charge it. This kind of spending leads to huge interest payments and can lead to problems paying for basic living expenses.

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About the author:

Michael Torrance is a financial consultant with First American Debt Consolidation and Loans, a company specializing in debt consolidation loan alternatives through consumer credit counseling.