Using credit cards responsibly may not sound appealing at first, but being plagued with too much credit card debt is an ugly mess that can develop quickly and linger for years. Making smart decisions about credit, on the other hand, isn’t difficult and can improve your credit score, help you when landing a job, and be welcome relief in the event of an emergency. Avoiding the following mistakes when using credit cards can leave you sitting pretty:

 

5 credit card mistakes that can cost you

1. Not keeping track of purchases – Sometimes when using a credit card it can seem like you have access to “free” money — you are not limited by the amount of money in your pocket and can go on making purchases without feeling any pain to your wallet. But although it may feel like you aren’t really spending much money, not keeping track of receipts can wreak havoc on your finances. Use a small notebook to write down credit card purchases when you make them so you won’t be surprised later when you get your monthly statement.

    

2. Not shopping around for the best credit card deals – Don’t make the mistake of signing up for the first credit card offer that arrives in your mailbox. Go online and look for the best possible credit card terms you can find. Credit card rates can vary significantly depending upon the type of promotions that may be offered.
3. Signing up for credit card rewards programs you don’t plan to use – Credit card rewards are heavily promoted to make consumers believe that they are getting something for free. But unless you want what is being offered, a credit card rewards program may not be much of a perk. Credit cards that offer rewards often have higher interest rates than nonrewards cards.
4. Not paying credit card bills on time – Late credit card payments resut in late fees and higher interest rates. Read through your credit card statement carefully so you know when the payment is due. Most credit card statements list the date and time that payments must be received to be credited on time. If you think a mailed payment won’t reach the company in time, consider making a payment online or by phone to get it processed faster.
5. Running up too high of a balance – Credit card companies get concerned when you use up too much of your credit line — and so should you. Try not to use more than 30% of your credit line to keep your credit score from being affected. Keeping a low balance or paying it off each month also means you won’t run up a lot of credit card debt.

Credit cards can be useful financial tools when used responsibly. And with it being so important to protect your credit score these days, avoiding these costly mistakes can help keep your finances in good shape – and that can make for a beautiful financial future.

Published 10/01/12 (Modified 10/05/12)