How Not to Use Credit Cards – 7 Deadly Sins

The following is a guets post from Alayna Frankenberry

Do you know how to handle your credit cards? Do you know what the seven deadly sins are? If you ever attended Catholic school, or if you’re a fan of horror movies and fashion editorials, you’re probably familiar with the religious belief that’s become a cultural trope. In fact, if you’re like most red-blooded Americans, you’ve likely checked at least three or four of the deadly sins off your list before it’s even lunchtime.

while most of us have found ways to “get away with” these sins on a regular basis (on this plane of existence anyway) there are some sins that could have a very immediate impact on your well-being. They’re the seven deadly credit card sins, and memorizing them is the first step on the road to financial salvation.

1. Ignorance. Zero APR? No introductory fee? Perks? It’s your lucky day! Or is is it? Before you sign that dotted line, take five minutes to actually read what you’re signing up for. If you don’t, you could be in for some nasty surprises down the road. Have you already committed this cardinal credit sin? Look for a low-interest balance transfers credit card to help you out of your financial hole.
2. Promiscuousness. This is a rookie mistake, but even credit veterans often lose focus and commit this common credit sin. When you’re approved for a new card or a higher line of credit, your excitement takes over and you act like someone who’s won the lottery instead of someone who’s forking over their hard-earned money (plus interest). Remember, just because it doesn’t come out of your bank account doesn’t mean you don’t have to pay for it. Treat your card the same way you treat your checking account, and keep your greed under control. Wise use of credit cards can help you avoid debt.
3. Underpaying. We’ve all committed this credit sin at least once, and many cardholders do it without realizing how harmful it is. Making the minimum monthly payment is tempting when funds are low and your budget is stretched thin, but it both damages your credit score and forces you to pay hundreds or even thousands more than you owe in interest. Each month, do more than the bare minimum. When you do, you’ll be protecting yourself in two different ways. Better still, paying bill in full and on-time.
4. Hoarding. Does your wallet contain more cards than your local Hallmark store? If so, you’re guilty of this deadly credit sin. It’s not abnormal to have more than one card, but if you’re signing up for cards left and right, you’re killing your credit score and turning your monthly bill-paying into a Mensa riddle. You don’t need 20 separate credit cards. What you need is to calm down.
5. Cardicide. File this one under “wrath.” If your credit situation has become so insurmountable that you feel like there’s no solution, closing a bunch of cards can seem like a smart move. Like most ideas that come to us in a rage, this one’s a bad idea, because closing cards can harm your credit score. To repair your credit and build good credit over time, create a payment plan that you can handle and work patiently to pay off your cards instead.
6. Generosity. You have a friend who needs to make a purchase. He comes to you for help, and in a misguided attempt at being generous, you hand over your card. Big mistake. This action might seem saintly, but it’s one of the biggest credit sins you can commit. You know how your friend can’t get good credit? There’s a reason for that. Lend your card to him and you’ll feel pretty good for a while, but when it comes time for him to pay you back, you’ll feel like a bank.
7. Perking. Those gas discounts, free air miles and cash-back rewards might seem heavenly, but an obsession with perks often leads to financial purgatory. Those special prizes are designed to be alluring, but to get them you’ll have to spend. Overspending outweighs the benefits of your card’s perks, and so instead of finding yourself in a wonderland of free goodies, you’ll be kicking yourself for letting your feelings overwhelm your common sense.

Memorize the seven deadly credit card sins, then take a good look at yourself in the mirror. If your naughty credit habits are more likely to earn you a spot in a financial firepit than a pass to the holy VIP lounge of credit card success, just remember that it’s never too late to repent. Start doing your penance now, and get your credit back on the road to salvation. Because no matter how bad you’ve been in the past, the door to financial redemption is always open.

Alayna Frankenberry is a freelance writer who believes you shouldn’t have to perform a full-scale exorcism to find financial salvation.