5 Credit Card Moves That Seem Smart But are Actually Dumb

In today’s society, it’s almost impossible to do without a credit card; you wouldn’t be so far from the truth if you called the credit card a ‘life saver’ because that’s exactly what it is.

Whether it’s that sunny afternoon when your car decides to break down on the highway without prior warning; that plumbing emergency which had you calling on the emergency plumbing squad or that sudden illness that sent you to the hospital within minutes, your credit card can be the only thing that’s got your back at such times.

But a lot of people run into problems because of the liberty which credit cards offer. They abuse it and eventually find themselves neck deep in debts.

 These are five credit card moves you must avoid if you want to avoid such credit card problems;

Most people think “Oh, I don’t need a credit card anymore” and then go ahead to cancel their credit cards but that’s not such a smart move. Cancelling your credit cards actually drops your credit rating. Credit scores are calculated based on how well you use the credit funds available to you but when you cancel your credit cards after using it for a while, it affects your debt-to-credit ratio and subsequently reduces your credit score.

Also, having credit cards gives you a good credit history which would be very useful when you need to obtain mortgage loans. So instead of cancelling your credit cards, why not just stash them up somewhere?

 #2. Have More Than One Card

We understand that you want to ‘play it safe’ hence your decision to possess just one credit card but hey, one credit card is not going to give you enough credit history to be able to obtain bigger loans. Most financial service providers consider your credit score before approving your loans ad multiple lines of credit helps you build a stronger credit profile for yourself because it helps to increase your debt-credit ratio.

#3. Use Your Credit Cards

Credit Cards are very important for building your credit score but having a credit card alone is not going to help you achieve that. You have to use your credit cards. Potential lenders are not interested in how you did not incur so much debts or how you don’t spend much, instead, they want to see how well you can manage credits offered to you.

We know we already said having one credit card is not enough but don’t go credit card crazy by applying for too many credit cards either. A lot of people do this with the hope that it helps to build their credit scores faster but it doesn’t and this is why;

When you apply for a new credit card, the issuing company would have to conduct a credit check on you. This credit check impacts your credit score and having too many credit checks at a time is simply credit score suicide.

 #5. Go for High Credit Limits

Find another way to keep yourself from overspending because settling for low credit limits is not a smart move. Low credit limits sends out a negative message to potential lenders that previous lenders were not too comfortable with lending you money. Instead of settling for low limits, find a way to pay off your debts and then reapply for higher credit limits.