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Bad Habits of People with Bad Credit

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Keeping too many cards in the wallet

It is very dangerous to bring more cards in your wallet than is necessary. In the event of theft, you’ll have more issuing banks to alert, and worse, reporting is even harder when you’ve forgotten about some of those cards that you brought. Make sure to bring only the cards that you use frequently.

Using store cards to avail discounts

It’s one of the traps many people fall for, thinking that they’re saving money on these cards. However, most of these cards tend to carry higher interest rates than general-purpose cards. Only use these cards when you intend to pay off the balance in full, because chances are, you’ll be paying for more in interests than the discounts you availed.

Charging instead of paying for cash

If you’re constantly using your cards to charge all your purposes, even everyday necessities that you should be paying by cash, it’s high time you break this habit. While a credit card offers the convenience of delaying your payments for quite some time interest-free, it could be very tempting to rely on it, and sooner or later, you might find yourself deep into debt.

Making cash advances on your credit cards

Depending on cash advances to survive whenever your personal account has run dry is not a good habit to handle your finances. This action is very expensive, not to mention that there are no grace periods and you incur interests the moment you swipe your card on an ATM machine. When you constantly find yourself relying on cash advances to bail you out of cash shortage, it’s time to take a look at your budget and learn to stretch your cash until the next paycheck comes.

Not reading the creditor mail. Many of us are guilty of just looking at the due dates, balances, and minimum payment required on our credit card statements. But these letters might contain notices regarding certain term changes that you should definitely be aware of, such as changes in your interest rates, fee structure, and rewards program.

Not having a budget

In most cases, the leading cause of debt roots from your spending habits. If you lose track of your finances, it might put you in a bad credit situation one day. If this is the case, aim to keep your financial life organized. Determine how much income you make every month and where your money is going. If you’re spending more than what you’re making, find out how to cut costs on your expenses and assess which areas you can save money.

Not having an emergency fund

You will never know when life becomes bitter and you are suddenly faced with huge financial trouble. One accident or medical emergency can force you to take on unwanted debt or max out your credit cards despite the high interest fees that await. This is why it is important to keep a rainy day fund, so you’ll always have that cushion when the unexpected comes.

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