Mistakes to Avoid for Reward Credit Cardholders

If you own a reward credit card, it is very important to take charge and not allow the prospect of earning rewards lead you to bad credit. Instead of letting your credit card take over, you should be the one to decide what types of purchases can be charged to your account. This may seem like an easy task but in reality, this can be a big challenge.

In fact, many reward credit cardholders are struggling to catch up with their bills primarily because of uncontrolled spending and poor credit card management. Let us talk about the most common mistakes reward cardholders make and how they can be avoided.

1. Paying Only the Minimum Due

It may be tempting to submit only the minimum monthly due payment instead of paying the balance in full. Some cardholders make this mistake even when they can afford to pay off their complete balance. Are you one of them too?

But if you own a credit card with reward, you have even more reason to pay your monthly balance in full. That’s because you are subjected to higher interest rates than non-reward cardholders. Imagine how much more you will end up paying, if you only pay the minimum within the next few months. The interest rate costs may well offset the value of rewards you earn.

2. Using Your Credit Card for Daily Purchases

There are two reasons why you should not charge daily purchases to your reward credit card. First, you are more likely to spend more than what your budget permits. Second, you are increasing the risk of maximizing or exceeding your limit, which can be damaging to your credit score.

Credit cards should never be used for unplanned purchases especially if you’re not sure if you will be able to pay your full balance on time. If you’re not careful, an item that you originally bought at $5 can turn to a $50 purchase because of the interest rate.

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