I know that I talk about credit cards a lot. Still, I can’t even tell you how many times I see people carrying crippling amounts of credit card debt because they’re just so darn easy to get and use these days.

What’s shocking is how many times we repeat the same mistakes with our credit cards even though we’ve been burned before. Here are three of the most commonly repeated mistakes I see people making with that little piece of plastic.

3. Getting a credit card. Okay, okay, I know. It’s low-hanging fruit, considering we need cards to make some kinds of purchases, but a critical one to think about. Any situation that leaves you owing someone more money than you spent in the first place should be evaluated closely. Besides, using credit instead of cash statistically results in 15% more frivolous spending. They make it so easy to impulse-buy what we don’t actually need!

2. Only making minimum payments. You’ve probably already got a credit card, so I want to point out that only making your minimum payments is a mighty fine way to spend the next 10 years paying off your debt. Seriously. Interest is a killer! If you made only minimum payments on a $10,000 credit debt, not only would you be paying it off for the next 35 years, but when all is said and done, you will have shelled out over $15,000 in interest. I know I’ve talked about this before, but I can’t stress it enough – do not just make minimum payments on your credit cards.

1. Carrying excessive debt. On the subject of a $10,000 credit debt, when you’ve maxed out on that, you might think, “Oh, okay, I’ll just get another one to help pay that one down.” Next thing you know, that one is maxed out too, and you’re sitting on a mountain of debt and sadness.

I’m not saying that having a credit card is evil and will lead to financial ruin, but I am telling you that you need to be careful about using it.

If you find yourself repeating the cycle of credit debt, then we’d like to hear from you! Give us a call at 513-563-PLAN (7526) or go online to talk about how you can spearhead your finances.

Regards,
Nikki Earley, CFP®