Bad Habits You Must Avoid in Credit Card Management To Prevent Debt

Enjoying the independence that comes with having your own credit card is a wonderful feeling. You can go where you want, when you want, and always have a viable payment method. What freedom!  As with any freedom, though, managing the way you use it is essential! Ignoring your credit card account and letting the debts pile up is, of course, bad. But it can be just as unwise to over-manage your credit card account based on some hearsay or myths floating around. Don’t let those myths drive you to action until you read about these 6 moves that may sound like positive credit card management – but which, in fact, can be harmful to your credit history.

1. Cancelling Your Cards

It may seem like it’s a good idea to cancel your cards at a particular moment if you think you’ve been spending too much money. But the problem here is that canceling them is not nearly as good a decision as actually controlling how much you use them. By canceling a card, you place yourself and your credit score at a disadvantage. When you cancel a card, you automatically have less available credit, and this increases your debt-to-credit ratio. It behooves mentioning that it may then be harder for you to get loans in the future with this lower credit score.

2. Never Using your Cards

While it may seem like a good idea to cease using your credit cards to stop racking up a large amount of debt, this plan can backfire on you as well. If you have a credit card for emergencies only, and you use it only in those instances, it can hinder you from establishing a good credit history. Having a card, using it and paying the bills on time will actually help you build a good score moving forward into the future.

3. Owning Just One Card

Your credit rating can also be hurt if you have only one credit card. Having only one card is not a great way of building up a line of credit and credit history, both of which are important for your future in getting a loan for a house or car. If you open up two or three card accounts use them sufficiently and pay off your credit card balances on time, you show that you are reliable to more than one creditor.

4. Having a Low Limit

When you open a credit card and a lower credit limit is set for you than what you feel you’re in a position to budget, it’s not always a good sign. If this happens, it means that these credit card companies do not feel comfortable lending you a lot of credit. You can actually keep this from happening by paying off some of your current debt before you apply for a card. By having less debt in your name, the credit card companies are more likely to grant you a higher limit for your card when you do apply.

5. Building Your Credit by Maintaining a Balance

A lot of credit card users think that if they do not pay off the balance on their cards, having a balance there will help them to build up their credit history. This is simply not true. It is better to actually pay off the balance every time it’s due because that is what lenders want to see. By doing this, you’ll actually end up with a better credit history than if you consistently carry an outstanding balance.

6. Applying for Many Cards at Once

Because you must go through an extensive credit check before being approved for a credit card, lenders can see if you are applying for multiple ones at the same time. This can actually be harmful because it may give the impression that you want to have a large amount of credit available within a very short period of time. It is likely that your applications will be denied. To avoid this scenario, wait at least 90 days between each application so there are not so many red flags being waved all at once.

Following a few simple steps can help you get the credit card that you need and want in your life. There are many things you need to be certain about before you apply for cards. Furthermore, you want to make sure that you don’t take any steps that you may think are good choices, but which can actually work against you in the future. By keeping things clean and paying your bills on time, you should have no problems at all with your credit cards as you move forward.