5 Things You Shouldn't Do With Your Credit Card

Hey everyone, thanks for coming back for another Monday Money! I’m Josh from CNA Finance and, I fill this column with great tips on how to save, make and borrow money. Today, I’m going to talk a bit about credit card mistakes. The truth is, helping consumers with debt has taught me a lot of what not to dos. Not to mention, I’ve made a few of these mistakes myself. Here are 5 things you shouldn’t do with your credit card…

Use It For Cash Advances – Cash advances are the worst balances that you can build up. This is because they tend to come with much higher interest rates than standard purchase. That in it’s self sucks but, it gets worse! If you make minimum payments, your payments are allocated to the balance with the lowest interest rate first. Therefore, your cash advance balance with the high interest rate sits untouched and you end up paying tons more than you thought you would in interest!

Make Large Purchases – Surprisingly enough, I’ve talked to people that have purchased cars with their credit cards for 0% promotions. The bottom line is, larger purchases should be made using a form of secured loan. For instance when purchasing a car, you need an auto loan, even if you have the available credit on a credit card with a 0% promotion. Credit card interest over the life of a large debt is going to be much more costly than interest on an auto loan, motorcycle loan, boat loan, etc… Therefore, avoid the high rates, use the lending products designed for the type of purchase you’re making.

Pay Large Medical Bills – Now, I understand the need that we have to fulfill our obligations, that’s very important to us. However, if you can’t afford to pay a medical bill, save up until you can. Don’t go putting it on a credit card. There are 2 reasons for this. First off, medical bills have no interest charges. So, the balance doesn’t grow with time in most cases. Also, in the U.S. you can’t be sued for past medical expenses. They may hurt your credit but, you can’t be taken to court. However, if you put that bill on your credit card and, later can’t even afford the minimum payment, you face harsh repercussions.

Let Friends Use Them – Another thing that I often hear when I ask, “So, how’d you come across all this debt?” is something along the lines of, “My friend really needed help so, I helped him/her, time and time again for a few months. He/She said he/she would pay me back but, could never afford to actually do it.”. Truth be told, I’ve put myself into debt helping a friend. It was the worst mistake I’ve made. Not only did it affect me financially, it tore apart a great friendship. And, all this over a couple thousand bucks. I know how much you want to help the people that you care about and, there’s nothing wrong with that. However, going beyond your means only hurts you!

Not Taking Advantage Of New Offers – This one won’t necessarily lead you to debt but, it could cost you rewards and a few more bucks in interest every month. If you actively use credit cards, it’s important to make sure that the card you use is the best one for you. I’ve talked to people paying over 20% interest who didn’t want to transfer a balance because they wanted to be loyal to the lender they’ve worked with for 15 years. The bottom line is, it’s important to remember that new offers come out each and every year. These offers have to provide more than the last or, no one will want them. So, check what the market has to offer and make sure that the card you have is best for you! There are plenty of information about these things online, so be sure to do your research beforehand.

Thanks For Reading

I really appreciate you taking the time to view and read this post! Have you ever made any of these mistakes? If so, would you mind sharing your experience in the comments?

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