As we head into the new year a lot of us are starting to make New Years resolutions and promises to ourselves that we are going to change our ways. For a lot of us that includes financial changes. The problem is that most people will revert back to old ways after the first couple months of a new year. To help keep yourself accountable in 2016, here are five common credit card mistakes that most people make each year.
- They Forget the Basics
Make sure that you are paying your balance off in full each month. This is something that a lot of people let slip away each year. The average person carries a balance of one third of their total credit. This means their credit utilization ratio is right around 33%. While this isn’t a terrible number it’s not going to allow you to build your credit. The interest charges that you will be paying will also negate any rewards that you earn each month.
- You Open or Close Too Many Credit Card Accounts
One of the biggest mistakes people can make to their credit is closing too many credit cards. If these credit cards have been open for a while then the average age of credit accounts can drop significantly. It can also cause your credit utilization ratio to increase.
If you have recently paid off credit card debt then you might have the urge to apply for new credit cards in order to take advantage of some incredible signup bonuses that are offered. Signing up for too many cards too quickly can have a negative effect on your credit. You also should avoid new credit accounts if you are planning to take out a big loan like a mortgage.
- Mishandling a Balance Transfer Card
One of the best ways to eliminate credit card debt is with a balance transfer credit card. These cards offer consumers 0% interest for a specific introductory period. If you are not making regular payments to pay down debt then you can find yourself at the end of the promotional period having not made any debt pay down progress. Instead set up a monthly payment amount and have it automatically debited from your checking account.
- Forget to Monitor Your Credit Regularly
One thing that a lot of people forget to do frequently is monitor their credit. It’s important to remember that you are allowed one free check of your credit report every 12 months from Annualcreditreport.com. This will help you monitor things to make sure your identity hasn’t been stolen and credit accounts haven’t been opened under your name.
- You Don’t Monitor Your Monthly Statements
One thing that you can easily forget to do is monitor your monthly credit card statements. This is something that everyone should do as soon as it arrives because it can be the early signs that your credit card information has been stolen. If you notice transactions that were not made by you then you need to call your credit card company immediately.