There are hundreds of ways to make financial mistakes, but some of them will cost you much more than others. Certain financial mistakes can take years to correct and cost you thousands of dollars in fees and interest to repair.
Avoiding these mistakes entirely is the easiest way to avoid financial disaster, so it is important to be vigilant at all times and avoid careless actions that could harm your finances. Here are some of the most costly financial mistakes you can make.
Making Payments Late
Neglecting to make the payments on your Credit accounts on time can be a very expensive mistake. If the payment is made late, several consequences generally occur.
A late payment fee will be added to the balance of the account, increasing the amount subject to interest charges. The interest rate for the credit account will rise significantly, often jumping to above 20%, considerably increasing the amount you have to pay on the funds borrowed.
Your credit score will also drop with each late payment. Try your best to make all of your credit account payments on time and cut your expenses if you are having trouble making them.
Charging Too Much on Your Credit Cards
Using your Credit Cards too freely can result in large amounts of debt that can be very difficult to pay off. Each month a balance is carried on a credit card, you pay a considerable amount of interest to the issuing company for the privilege of borrowing money through the credit card.
Credit cards should only be used for emergency situations. You should try to pay off the balance of the account as quickly as possible to limit the amount of interest you pay on your purchases.
Applying for Too Many Credit Cards
Applying for too many credit cards can hurt your finances in several ways. The more credit cards you carry, the more inclined you may be to use them for costly impulse buying.
Applying for new credit all of the time also creates the appearance that you are someone who, in theory, could get much deeper in debt, so lenders will generally offer you a smaller or costlier loan than you would have otherwise qualified for.
Bad reasons for applying for a credit card include offers for free items like a free T-shirt or Frisbee, a small percentage off of your first purchase, or a very short grace period on your initial purchases.
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The post These 3 Financial Mistakes Can Cost You Thousands appeared first on Engineer Your Finances.
