Ways People Misuse Credit Cards and How To Avoid MisusingThem

Credit-Card-Fraud-1There is no doubt that having good credit history will give you the ability and freedom to do a lot of stuff. Whether it’s buying a new house, car or taking out a small loan to start a business; financial institutions will judge you based on your history of properly using credit cards. Here are top ways people misuse credit cards and how to avoid misusing them. 

 

Stop buying non-essential goods
Probably the easiest way that people end up misusing credit cards is by using them to pay for non-essential items and goods such as electronics, meals, entertainment and other things that usually aren’t budgeted for. Only use major credit cards to pay for items that are essential such as gas, utilities, food and other items that you know will definitely spend money for in the absence of credit cards.

Do not go over 30% of the credit limit
One of the biggest mistakes that many people when using credit cards is going over 30% of the credit limit. Say for instance you have a $1,000 card limit, going over $300 will not positively impact your credit report because the credit report companies will see that you are over-relying on credit for income purposes. Stay within 30% of the card’s limit to help improve your credit score.

Minimize Merchant Fees
Another problem that people frequently experience when using credit cards is not knowing fees associated with payment processing. It is very common for companies to charge a service fee to individuals using a credit card because they do not want to absorb the costs of at times, expensive payment processing services. Payment processing services can be quite expensive for small to medium sized businesses and many merchants and vendors do not want to have to pay a huge price for a small transaction.

If you are a South Florida-based business, look into a reputable Miami credit card processing service for your credit card transactions. Using a Miami credit card processing service will help you save time and money when it comes to conducting major credit card transactions. Many payment processing services also charge hefty monthly fees. Therefore, businesses in Miami, Fort Lauderdale, West Palm Beach and the Keys should look to using a Miami credit card processing service that will help you save on transaction fees.

Avoid Store Credit Cards
Many people get lured into getting retail store credit cards. Usually these cards have limits of anywhere between $300 to $1,000. Nonetheless, these cards, while might seem attractive because of the benefits of getting in-store deals, will actually prove pointless given that many of them do not help establish good credit. Stick with a major credit card offered by a large financial institution.

Multiple Revolving Accounts
Although it is good to have multiple revolving accounts to show prospective lenders that you are able to make multiple credit payments each months; having too many multiple revolving accounts can show lenders that you are a bit reckless when it comes to consumer credit. It is better to have no more than two major credit cards with larger limits versus having five or six smaller credit cards.

Credit cards can prove to be costly and damaging to one’s creditworthiness if not used right. Make sure that before using a credit card, you have the ability to make affordable monthly payments and that you are buying something that is really needed. Improper usage of credit cards can prove to be a disaster years down the line. It can take seven years to have negative credit card reporting fall off your credit report.

Skybank Financial is a payment processing company that services the United States and South America. For more information, speak to a Skybank consultant at 1-800-718-0446.

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