Credit cards can be your best friend or your worst enemy depending on your financial behavior. Individuals who use a credit card responsibly, always find it beneficial to have a credit card while others end up having a misconception in their mind that credit cards lead you to a debt trap. If you are stuck under high and unmanageable debt after using a credit card, it’s undoubtedly due to some mistakes that you make knowingly or unknowingly sometimes. So, in this article, we explain to you about credit card resolutions in full detail just read below.
Credit cards never ask you to get them out of your pocket and spend an unlimited amount, but it is always the cardholder who spends without keeping the fact in mind that he/she will have to repay the amount and this is the actual reason behind credit card debt consolidation. With the beginning of the year 2022, you should take some new year resolutions as mentioned below and stick to them in order to become a responsible credit card user and avoid debt consolidation.
1. Avoid Unnecessary Spendings
Credit Cards allow you to make big purchases, but it doesn’t mean that you should spend on any random thing without even thinking about whether you really need it or not. Many people consider credit cards as easy access to money and hence they spend on unnecessary things, resulting in a high outstanding balance on their credit card.
Doing this doesn’t only affect your credit score, but debt consolidation can also have a very negative impact on your mental health when you find yourself unable to pay off the debt. Therefore, your first new year resolution should be not to overspend. Try making a monthly budget and include only necessary expenses in it. Stick to your budget and think wisely before purchasing anything.
2. Never Miss Credit Card Payments
If you are a credit card user, you must be knowing the importance of making credit card bill payments on time. There are many reasons behind it. If you don’t pay your credit card bill before or on the due date, you will be charged a late payment fee and the interest will start accruing on your outstanding balance.
Not only this, but it can also impact your credit score badly as your payment history plays the biggest role when your credit score is calculated. Missing credit card payments is the biggest and most common mistake that a lot of credit cardholders make, but it is always a bad idea.
If you can’t pay the full outstanding amount, you should pay at least the minimum due by the payment due date so that you can avoid the late payment fee. However, paying the full outstanding amount every month is the best thing one can do. So, you should promise yourself that you will try to pay the full credit card bill every month.
3. Don’t Apply For Too Many Credit Cards
Whenever you apply for a credit card, the card isuers check for your credit report and this is known as a hard inquiry on your credit profile. In order to maintain a good credit score, it is never a good idea to apply for so many credit cards within a short time period. If you keep applying for credit cards very often, the card issuers may consider you as a risky borrower who is very much in need of money. Moreover, it also affects your credit score in a negative way. So, if you have already applied for a credit card, wait at least for 6 months before applying for another one.
4. Maintain Your Credit Score
Building a credit score can be a task for many individuals, but maintaining a good score always is even more challenging. One missed payment can drop your score by so many numbers. If your credit score is average, you should try to improve it and if it is already excellent, you should make sure that it remains the same. There are 5 major factors that affect your credit score, including your payment behavior, credit utilization ratio, credit mix, number of hard inquiries on your profile, and the average age of your credit accounts. You should keep all these factors in mind while using your credit card so that your credit score doesn’t decrease but increases only.
5. Track Your Monthly Statements
Most credit card users ignore the monthly statements that are sent to them via email or via post. But as a responsible credit card user, this is not what you are supposed to do. You should always go through your credit card statements so that you can check where you are spending unnecessarily and stop such purchases.
You can also check if there are some errors in your credit card statement, like incorrect numerical values, repeated transactions, etc. If you find any errors in it, you can contact your card issuer to get it corrected so that you don’t pay any extra amount unknowingly.
On the other hand, if you don’t check your statements, you will never know about these errors and hence you will have to pay more than you have spent. So, make sure to check your credit card statements every month. It will take only a few minutes.
These were some new year credit card resolutions that you should stick by in order to keep your credit journey smooth and stressless. Having a credit card will only help you if you are ready to use it responsibly instead of making purchases that are not actually needed.
The most important thing to keep in mind is to pay your credit card bills in full each month as it solves most of your problems. Start your new year with the above-mentioned financial habits so that you can make it your best year till now in terms of finance. Team Cardinsider wishes you a Happy New Year and all the very best for your new year resolutions.
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