Americans die with an average debt of $62,000. Here are some ways to manage that debt before it’s too late.
Do you have a credit card in your wallet? Chances are, you do.
AndÂ if youâre one of these plastic carriers, you probably want to be using that card the best possible way, right? Well, you may be making some mistakes without even realizing it. To help, weâve rounded up eightÂ common mistakes to help you discover if you have one of these habits and ultimately correct it.
1. Paying your bills late
âWhat can do you the most harm is paying late, or not paying at all,â credit score expert Barry Paperno said.
Late payments affect your credit score, plus the late fees and interest quickly add up. Besides all of the effects that hit you right away, Paperno said it can take years to recover from numerous late payments. And if you let it go too long, you could be hit with a charge-off (the point, usually after six months without payment, at which the lender writes your account off as a loss), which stays on your credit report for seven years.
2. Closing a card you donât really use
Despite the fact that you never use a particular credit card, closing that card isnât necessarily the answer. When you close cards, you affect your credit history, usually negatively.
âDonât make the mistake of closing cards,â Paperno said. âEspecially if you think it will help your score, because that will never raise your score.â
When you decrease the amount of credit available to you, you end up increasing your credit utilization ratio, which can hurt your credit. Instead of closing a card, consider simply using it every so often and keep the account active. There are times when closing the card may make sense, like if it carries an annual fee…