Are you a bad credit card user? Sometimes, people can’t get out of debt because they don’t realize that they are the problem. They think that they should earn more. Or they should change something in their budget plan.
But if they just know the tell-tale signs, they would have realized that their financial habits and credit choices – these are the real problem. Unless you change your mindset about how you should use debt and finances, your situation won’t improve.
Take this statistic as an example. A survey revealed that 37% of families end up relying on credit cards for necessities like bill payments. While there’s no limit to how you can use your credit cards, it’s never a good idea to use them for necessities. The only time it’s okay is when you are doing it for the rewards points. But when the billing statement comes, you have the cash on hand to pay off your balance in full.
If that’s not how you use your credit cards, then there’s a problem. Using it to pay for bills, food, and groceries is dangerous if you have no idea how to pay it back.
And in all honesty, being okay with that scenario means you are a bad credit card user. Unless you can improve your credit habits, you should stop using it first. You need to improve your perception of how credit should be used.
How to know you’re a bad credit card user
How will you know if your perception of credit use is skewed? Fortunately, there are tell-tale signs that will indicate if you’re a bad credit user or not. Here are some of them.
Maxed out cards
Take a look at your credit bills. What is your current balance? If your credit cards are maxed out or about to reach the limit, then that’s a clear sign that there’s a problem. Especially if all your credit cards have the same situation. You need to do something about how you use your cards because it can quickly blow up in your face.
And don’t think that even if you get past this now, it won’t happen again. If you don’t change your habits, there’s a high chance that you’ll land in the same predicament in the future. In one survey, it’s revealed that 14% of their respondents admitted that they’ve maxed out their credit cards several times. This means it does happen. Even if you’ve gone through the difficulties of paying off your maxed-out cards, there’s a chance you’ll do it again.
If you want to keep that from happening, don’t be a bad credit card user.
Pay only the minimum
Another sign that you need to improve your credit habits is if you only pay the minimum of your credit card bills. That’s not illegal – but it’s not going to do your finances any good.
You see, sticking to the minimum payment requirement means you’re only paying a small part of your principal balance. If you’re chipping off only a small amount every time, it’s going to take you a very long time to completely pay it off. And the whole time you’re doing that, you’re paying interest. So the longer it takes to pay off what you owe, the more interest amount your paying.
That amount could have been used to improve your financial situation. It could have given your emergency fund a boost. Or it could have helped you start a new business. If you want to make these happen, pay more than the minimum payment requirement that’s stated on your monthly bill.
Missing monthly payments
If you keep forgetting to pay your credit cards on time every month – that’s also a sign that you’re a bad credit user. Especially if you’re forgetting, not because you can’t afford your debt payments. But because you’re just not organized enough to know when the due dates are.
This is an unacceptable behavior because it’s going to cost you money. And in truth, it’s a simple fix. You just have to set up reminders that will tell you if it’s already time to set up the payments.
There are so many ways to do that. One is to set up email reminders that’ll give you notifications. Or you can use your phone to remind you that there’s an upcoming payment. You can also set up the autopay feature with your bank. Your payments will automatically be sent to your accounts. You just have to make sure that the source account has enough funds.
Using your card for impulsive purchases
Finally, a sign that you are a bad credit card user is shown through your impulse buys. Take a look at your credit card bills. Are all those expenses planned? Or were they spur of the moment purchases? If it’s the latter, then you have a problem. You have to work on this habit because it can lead you to accumulate a lot of debts.
If you know that you are prone to making impulsive buys, don’t bring your card on shopping errands. You should also get into the habit of writing a shopping list. Anything that’s not on your list should not be bought. If you get home and you find yourself still wanting to buy it, then include it in your list for the next shopping schedule. That way, you can really control what you spend every time you go out.
Effects of a bad credit card user
Why is it so important to avoid being a bad credit card user? Because credit card debt can be very destructive. The high-interest rates alone can keep you in debt for a very long time. But beyond that, these are some of the negative effects of using your credit cards the wrong way.
Low credit score
If you accumulate a huge credit card balance, it can affect your credit score negatively. Sure, you can use your credit card to improve your credit score. But that’s only if you pay your dues on time and you can manage your balance well. If not, then you’re credit score will just get worse. Once it gets worse, you might have limited financial opportunities. Like it can keep you from enjoying a low-interest rate on your mortgage once you decide to buy your own house.
Denied credit accounts
Worse than being given a high-interest on loan applications, it’s possible that creditors and lenders will disapprove of it altogether. This can hinder your dreams of owning your own house. Or maybe buying a more fuel-efficient car that can lower your monthly car expenses. Consider the credit accounts that will be denied to you because you were a bad credit card user. If you happen to need that new account badly, it will make things harder to get past the difficult situation you’re in.
The last effect of using your credit cards the wrong way is the added stress. When you have a lot of debts, it can keep you awake at night. It can put a strain on your monthly budget. You’ll feel really restricted and that can make you feel miserable. So just avoid this problem by making better decisions on how you use your credit cards.