NDSU Extension Service - Ramsey County


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How NOT to Use Your Credit Card

How NOT to Use Your Credit Card.


Financial advice often comes in the form of what “to do”.   Occasionally though, it is helpful to look at advice from the opposite viewpoint of what you NOT be doing.   When it comes to credit cards, there is an especially long list of what not to do.  If you are looking to lower your credit score, pay too much in interest and negatively impact your savings account, do the following. .

1. Sign Up for Every Credit Card You See - Why bother to shop for the best rewards or the lowest interest rates when you can save 10% today on your purchase of socks? And why would you want a sign up bonus to travel the world for free when you can get a cheap t-shirt instead?

2. Never Pay Your Bills in Full - Determining how much your purchases will cost over time is very difficult and requires the use of a calculator. It is much easier not to think about complicated things like compounding interest and just make the minimum payment. Even if it means that latte will eventually cost you $50 when you add in the interest you have paid.

3. Don’t Make Your Payments on Time - Since you are not concerned with interest and what it will do to your balance, why bother with the due date? They will just add some fees and raise your interest rate. Since nobody can figure out how credit card interest works anyway, why bother worrying about your APR (average percentage rate)?

4. Always Pay Foreign Transaction Fees - Before leaving on your vacation to Mexico, don’t figure out if your credit card has a foreign transaction fee. The 3% fee you will likely be charged must certainly go to a good cause, like bank profits or something.

5. Use Your Credit Card to Withdraw Cash - Why use an ATM card when you have a credit card? With your ATM card, you can only take out as much cash as you have in your account. But with your credit card, you can withdraw against your line of credit, which is probably much more than what you have in your bank account. Definitely disregard the high cash advance APR and any fees.

6. Pay Your Tuition with Your Credit Card - Pulling out your plastic is much easier than filling out student loan forms. Don’t worry about the difference in the interest rates between credit card debt and subsidized student loans. And don’t think about how the interest on student loans would have been tax-deductible, unlike your credit card interest.

7.  Help Out Your Friends By Co-Signing on Their Account - If you have a good friend who needs help, co-sign their credit card application. By co-signing their application, you are doing your part to help them get credit, even though you will be equally responsible for any debt they incur. Since you’re sure they won’t default, you don’t have to worry about paying their debt for them or having your credit ruined.

8. Use those Checks that Your Credit Card Company Sends You- Occasionally, you might have a rent, mortgage, or other payment that you can’t pay with your credit card. That is why you’re sent those convenience checks. Don’t shred them. Use them to pay your bills. Don’t worry about withdrawal fees or confusing terms like “cash advance APR.”

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