The small plastic cards containing a means of identification that include signature or picture. Furthermore, it authorizes the person’s name on it to charge goods and services to an account, for which the cardholder is billed periodically could be said to be a credit card.
Unlike Debit card users whose transactions are being deducted immediately from their bank accounts. This is done when they use their cards. Credit card users are being charged periodically on every of the transactions carried out on their cards, which is mostly monthly. How then can one abuse or overuse one’s credit card that it could attract some harmful effects on the users?
Originally, credit cards are supposed to be very useful for emergencies, required to hold a reservation. Also, for safety reasons, offer protection against fraud above and beyond other payment tools like debit cards. Especially when shopping on the web. Yet, with all these advantages if a credit card is irresponsibly used, it could bring many disadvantages like cause the holder financial distress.
First harm, a demeaning credit history. This may perhaps be the most devastating result of using abusing a credit card or using it irresponsibly. You need to know that if you do not use your credit cards properly, you are likely to develop a negative credit history.This will, in turn, lower your credit score. And a bad looking credit score blocks a variety of opportunities from the holder.
In the long run, a credit card holder with a negative credit history would be prevented from qualifying for loans in future. Loans which may include mortgage to buy a house to make a beautiful home, or a loan to buy a car for easy mobility.
Harm number two. This degenerated from the first above. It should also be known that people with low Credit scores would have difficulty renting apartments, to pay higher interest rates, to pay higher insurance rates, and also a more challenging difficulty of not being able to obtain a job.
However, these emotional, psychological, and financial harms that have been highlighted above could be curbed or avoided when you as a Credit card holder or a user could avoid the following card mismanagements:
- Exceeding your card’s credit limit: It is important to know that it is not financially wise to exhaust your Credit card limit. This happens mostly when your spending overshadows your stream of income. Watch it!
- Making late Credit card payments: Once you start getting notifications to pay up your Credit card dues, it is advisable to do the funding at the appropriate time. It ends up enhancing your credit scores.
- Paying only the minimum payment: When you are fond of always paying the minimum payment attached to your Credit card(s), it messes up your scores and credit history.
- Charging items that you cannot pay off immediately and owning too many Credit cards is another bad habit to be avoided.
What then should you do to keep you and your Credit card(s) out of harm?
You should learn to make it a habit to pay your Credit card balance in full every month, and pay your Credit card bills on time. These factors make you appear to be a diligent user with your card operators. Also, apply for only Credit cards that are needed, do not apply for the fun of it. And keeping track of all your Credit card charges by keeping receipts is very important as checking your monthly Credit card statement for errors, saves you from harm.