How My Ignorance of Credit Cards Almost Ruined Me (An African Immigrant Perspective)

hi welcome to the channel my last video was about money Mistakes by immigrants and I got so many questions about the credit card mistakes that I felt it warranted another video since that's what you all are asking about I am an immigrant in Canada straight from West Africa and I can remember receiving my first credit card in Canada No in fact it was my first credit card and ever and I was excited I have never had a credit card in fact in my home country we don't have credit cards well except for a few banks that offer them to selected customers and the way it works back home is completely different from here anyway when I got my first credit card I stared at it I was like I have a credit card fore money yay it was not about first side I mean I received many other credit cards after that one but that first credit card love who forgets their first love right that's my first love burned by finger sh best loves do that right but in a way it was not the fault of the credit card sh it was my ignorance of how to manage my relationship with that credit card so I got my fingers burned and I want to give you the lowdown of how that happened if you lack that kind of gist watch on a credit card is not bad in fact having a credit card is actually great it offers security and protection because when you're making purchases with your credit card there's often a zero liability policy that comes with it that basically means that if somebody takes your credit card and goes on a spending spree it's very simple for them to refund you and then they can go back and track down that person that stole your card there's also things like purchase protection and warranty extension that you get when you use your credit card most importantly a credit card helps you build a credit score a credit score is a number that depat your credit worthiness with a good credit score you can get very good rates for things like mortgage car loan and the banks are more inclined to give you loans if you need it the rest of this video is a bit technical but trust me I have made it as simple as possible when I presented this to my 10 year old nie she got it so you should get it too but despite this benefits I see a lot of people making some common mistakes that I want to talk about in this video I made a lot of these mistakes I had a lot of misconceptions about credit cards and I got my fingers burn in this video I want to go over six of the biggest credit card mistakes I made and that I believe that every new immigrant abroad needs to avoid shall we do know I see it credit card it's just a tool and it's a tool that can work for or against you depending on how you use it after I got my first credit C I was happy even though the credit limit was only $1,000 I thought I was privileged but I was surprised that everywhere I went everybody seems to be offering me credit card Walmart Costco it was Ring credit card they just needed to ask me are you interested ma'am and I would say yes and another credit card was mine to use now having multiple credit cards is not at all that bad as long as you manage it well but most of us don't I didn't manage mine well and after several credit card mistakes I learned my lessons and I TR down my cards to just two to three active cards but when I had those multiple cards I was making mistake number one I had no idea about how to utilize the amount that I spent per card to give me the best outcome now a lot of people look at their credit card limit as the amount of money that they are able to spend in a month and that's not necessarily how you should think about it now I know that one of the biggest factors of a credit card score is your utilization think of this as how much of the limit of your card that you have that you're spending and the lower the better now this is not set in stone but I advise that you try as much as possible to keep your utilization to 30% or lower so for example for a $5,000 credit card you can spend about $1,500 which is about 30% of 5,000 of course you wouldn't be penalized if you spend more than that but keeping your spend on that 33% will help your credit score though this is not the only Factor but it plays a big role in your credit score if for some reason you use your credit card in not more than the 33% you can actually pay off a bit of your credit card before your credit card payment is due in order to make sure that your balance at the end of the period is around that 30% or less and that's what gets sent to the credit bureau it's an easy way to boost your credit score the second mistake I made was that sometimes I could just not be bothered about even paying off my credit cards especially in the month when my expenses were way too high I could not afford to pay ah so I would just forget about it we will deal with it next month but doing that didn't help my credit score at all and the interest I was gathering now wow so don't be like me at a bare minimum you want to pay the minimum payment every month even though just paying the minimum balance means that you will pay interest on the balance as opposed to paying no interest if you pay off the full balance so let's say you spent $1,000 during that one month period and you only pay maybe $10 which is the minimum in this case you would need to pay interest on that $990 balance you did not pay got it h sometimes I wonder why the minimum payment is so low I think it is because it's a way for them to make money by collecting interests which in some cases could be as high as 29% talking about interest rates leads to my third mistake I never ever understood my credit card statement it was like Greek to me on like how much do I owe and what are these other numbers from my new knowledge I well know that when payment is due they send you a statement with all your transactions and the payments that you need to make you can pay off from the date the statement closes to the payment due date and that due date tends to be about 20 days from the statement Clos date so for example your statement opens June 22nd and closes July 21st the payment due date might be August 11th which is about 20 days later you need to pay by August 11th I know it can be confusing you are not alone if you are still confused about this you may need to book a call with your bank or the credit card company and get a more detailed explanation that's what I did in fact I booked an appointment and someone explained this clearly to me before then I never need the best times to pay up my credit card so I just set a date for myself and paid on that date but the idea is to be able to understand the dates so you are paying on time if you are a great teacher and you can explain it well please put an explanation in the comments below so we can all learn by the way have you subscribed to the channel if you have watched up to this point please subscribe so that we can reach a lot more people it's free and you will not be sent scam emails just by subscribing thank you very much mistake number four which in hindsight is just stupidity on my part was using my credit card to buy things that I could not otherwise afford now true story there was this one time I saw this person in a store and I knew my life would not be complete if I didn't buy that post ladies you know the feeling problem was I could not afford it there was no way but while the angel here was reasoning with me the dev here was explaining how I could get it with my credit card almost for free I mean no cash would exchange hands which in a way it's true well I was weak so I gave in and I bought the purse that I could not afford and I had many stories like that well it's not me it's my weakness anyway after many stupid purchases like that the light bulb went off in my head and I came up with a system for a while I decided to use my credit card to pay for just my phone bills my utilities and my internet bills at least those are fixed costs and I could protect what I would spend each month it was hard but if I didn't do that that voice in my head would have driven me to destruction my number five mistake which I would never have believed was a mistake was closing my credit cards instead of just stop using them or even downgrading them I do not know I made the mistake of closing my oldest credit card not not realizing that that was a big mistake ah it pained me sh when I became wiser one of the key factors in building a good credit score is the age of your credit accounts the longer you've responsibly managed credits the more trustworthy you appear to creditors and the better your credit score but sh did not know your oldest credit card serves as a testament to your financial responsibility and stability over time so closing your oldest credit card prematurely can substantially shorten your credit history which can have a negative impact on your score in summary do not close your oldest credit card if you are tired of the card or it's not serving its purpose anymore you can just stop using it you can also downgrade it to a no fee option so you can maintain the account longevity without inuring additional costs or you can just use the card very sparingly you can just use it every now and then but don't close it my sixth and last mistake for this video was that I had the wrong credit card and I didn't know it and as you are watching me it's possible you also have the wrong credit card and I will explain my first credit card was a travel points card it was giving me travel Points each time I used the card and oh I was so excited at first about gathering this points you know how you get excited when they send you your statement and then you see all your points building up every month but the problem was I was not traveling anywhere So eventually those points were of no use to me hi I changed the chat today I have a cash back card and I like it I need cash so it works very well for me so you want to find cards that make sense based off your own spending and your lifestyle at a bare minimum I would recommend that you get a cash back card which is the one that I have now now there are also credit cards that are good for hotel bookings there some are great for getting gas there are some that offer free CA membership here in Canada and there are many leers that have different kinds of perks you take your Peck and pick the one that works for you now are you learning one or two things so far go ahead and like the video now and subscribe if you haven't already done that that will encourage me to keep making these valuable videos at this point my question for you is this which of these credit card mistakes have you made which one do you think is the most common and which one can you not ever make even if the devil was here wh spring into your ears or your left shoulder let us know in the comment down below hope you liked the video give it a thumbs up share this video with a friend and please subscribe because there's much better videos coming up now I invite you to watch this video here to learn amazing strategies to save $10,000 without stress this year I hope you like it too thank you all so much for watching and till we see the next time don't go broke