Fewer Americans are using cash, and credit card balances are at a record high.
The average credit card balance is approximately more than $6,300, and the number is even higher for baby boomers, whose balance is around $8,000.
Americans may be charging it up now, but they are definitely paying later in interest and fees.
According to Seamus Caulfield, president of Shamrock Financial Services, credit card users need to keep in mind how much a purchase is actually costing you.
The receipt for your new television may say $850, but with interest and fees adding up over time, it would cost you around $1,000 or more.
The biggest mistake? Paying the minimum on your credit card bill. You definitely want to try to pay off your credit card each month when you get your bill.
Is paying off your whole balance a problem? Try shelling out a little more than the minimum. It means less dollars will come out of your wallet in the long run.
Four other mistakes include:
- You don’t want to do a cash advance unless you’re desperate. There are so many fees involved: The bank charges you a fee, there’s a cash advance fee, and the interest rate is higher.
- You don’t want to have more than three to five credit cards. It’s only going to give you an opportunity to get more in debt.
- Look at your credit line. It’s not recommended to use more than 30-percent of that or it can negatively impact your credit score.
- Don’t pay your credit card bill more than 60 day late. Your account could end up in collections, which can affect your credit score and cause your card’s interest rate to increase.