According to a recent study conducted by CreditCards.com, a staggering 84% of credit cardholders have at least one “risky” habit when it comes to managing their credit cards. These habits can range from carrying a balance from month to month to making only the minimum payment each month, both of which can have serious consequences on an individual’s financial health.
One of the most common risky habits identified in the study is carrying a balance on a credit card from month to month. This means that the cardholder is not paying off their full balance each month, resulting in the accumulation of interest charges. Over time, this can lead to a significant amount of debt that can be difficult to pay off. In fact, the study found that 45% of credit cardholders carry a balance on their credit cards at least some of the time.
Another risky habit that many credit cardholders engage in is making only the minimum payment each month. While this may seem like a convenient way to manage one’s finances, it can actually end up costing the cardholder a significant amount of money in the long run. By only paying the minimum, the cardholder is prolonging the amount of time it takes to pay off their balance, resulting in more interest charges and higher overall costs.
In addition to carrying a balance and making only the minimum payment, the study also found that many credit cardholders engage in other risky behaviors, such as missing payments, exceeding their credit limits, and using their credit cards to cover everyday expenses.
So why do so many people engage in these risky habits when it comes to managing their credit cards? The study suggests that a lack of financial literacy and discipline may be to blame. Many people may not fully understand how credit cards work or the long-term consequences of their actions. Additionally, the convenience and ease of using credit cards can make it tempting to overspend and rely on credit to cover expenses.
It’s important for credit cardholders to be aware of these risky habits and take steps to avoid them. This includes making a budget, paying off credit card balances in full each month, and only using credit cards for necessary expenses. By being proactive and responsible when it comes to managing their credit cards, individuals can avoid falling into debt and improve their overall financial well-being.