How to Bounce Back from these 4 Credit Card Mistakes
Hey … we’re all human! We make mistakes every day. Mistakes are life’s tutor, so if we learn lessons from these mistakes, you might say that these mistakes have value. Sometimes we make credit card mistakes.
Here are 4 common money mistakes we make with our credit cards and some advice on how to mitigate the costs and/or the damage to our credit scores. Don’t just shrug off the mistake and let the chips fall where they may. Instead you should take action!
Proactive is the operative word. When you make a mistake, and you will, do something about it—and quickly! As they say, “When you make a mistake, make amends immediately. It’s easier to eat crow while it’s still warm.”
1. Missed a Payment
- If you can make the payment within 30 days of the missed due date, at least you have no credit score concerns. Nothing is reported to the credit bureaus until the account is 30 days late. Get the payment made immediately! Okay, your credit score is safe, but you still need to worry about late fees and other penalties the creditor may impose, and you will almost certainlyhave some financial consequences.
- Late fees can be steep, averaging $23! Get on the phone immediately! Ask a manager what the possibilities might be for waiving the fee. If you are a long-standing customer with an otherwise good payment record, you may have some success at getting fees waived or reduced.
- Prevent a recurrence by setting up an automatic debit (at least sufficient to cover your minimum payment). Alternatively, acquire the habit of reviewing your accounts online weekly. Not only will this help you make your payments on time, weekly reviews can alert you to fraud or identity theft. If the timing of your payment is part of the problem, creditors will work with you to adjust your date. All you have to do is ask.
2. Missed your Payment by a Mile…Now You Are Beyond 30 Days Late!
- If your account is beyond the 30 day mark, ask the manager if they would consider amending their report to the credit bureaus. Rest assured they will want the account brought to a current status before they take any steps to help you. These folks have heard every excuse under the sun. Save the drama and just tell them the truth. They may find that incredibly refreshing and cut you a break.
- Additionally, follow the advice in the second and third bullet points above.
3. Exceeded Your Credit Limit
- This suggests that you are already making a mistake. Carrying too high a balance! You should not use more than 30 percent of your credit limit. If you have a $1500 limit, keep your balance below $500. This helps your credit score. The reverse hurts it.
- Under the CARD Act of 2010 you must choose to allow your credit card issuer to honor charges that exceed your credit limit, and you must agree to the fee that they will assess for that privilege … so, this isn’t as much a mistake as it is a choice—a bad choice!
- There isn’t much advice to be offered here. Pay your fee and get your balance down to the 30% of your limit range. Then cancel the over limit protection and don’t do that stupid crap again.
4. Inappropriate Use of Rewards Cards
- Rewards cards are a clever innovation of the credit card industry to make otherwise frugal people spend more with their credit cards. While it does make sense to get rewarded for things you were going to buy anyway, you need to avoid the mistake of pushing your credit utilization rate too high and adversely affecting your credit score.
- The mistake many folks make with their rewards cards is a rather common one. This fact is often misunderstood by rewards card users: The balance reported to the credit bureaus each month is the statement closing balance. Many rewards card holders (and standard card holders as well) are under the impression that by paying the card balance in full by the due date, credit utilization is zero. Not true! If you want to ensure that your credit utilization is in the right range (≤ 30% of your credit limit) you must pay down the balance before the statement closing date.
There are loads of mistakes we can make with credit and with money. Would anyone care to share one of their credit card mistakes?