6 Worst Credit Card Mistakes to Avoid


couple at the store

Couple at the store. | gpointstudio/Getty Images

Credit cards are convenient and can be useful in an emergency. However, when credit is not used properly, it can become a source of stress. There are some credit management behaviors you should be careful not to engage in. Here are the six worst credit card mistakes to avoid.

1. Late payments

It’s important to make your credit card payments in full and on time, every time. Your payment history accounts for 35% of your overall FICO score. That’s why it’s important to contact your lenders if you think you might not be able to make a payment on time. Some credit card issuers may work with you by moving your due date to later in the month. Address any issues concerning late payments as soon as possible.

2. Letting other people use your credit card

Sure, you want to help your friend or family member, but this is a bad move. Your generosity could come back to bite you. Almost half of the respondents in a survey by CreditCards.com say they allowed someone to use their credit card. Consequently, 35% had a negative experience. The results weren’t so great. Approximately 19% of survey participants said the person overspent on their card; about 14% said they never got their money back; and 10% said their card was lost, stolen, or never returned.

3. Taking a cash advance

A cash advance is usually not a good idea and should be avoided. Unless you’re experiencing a major emergency, this is not the best choice. That’s because cash advances have high fees and can lead to even more credit card debt. You’ll be charged either a flat fee or a percentage of the advance amount (anywhere from 2% to 5%).

You’ll also face interest charges. The interest rate for cash advances tends to be higher than the rate charged for purchases. Also, interest on cash advances often starts accruing right way. Unlike purchases, there’s no grace period.

4. Not taking advantage of rewards

Another mistake is not taking advantage of your credit card rewards. It can be easy to lose track of how much you have earned and end up not using your points at all. If you often lose track, one thing you can do is use an online rewards tracking website. You can also write down how many points you’ve earned in a spreadsheet.

5. Depending heavily on credit

How much you owe on your credit cards is considered when it comes to your FICO score. The amount you owe on your credit cards accounts for 30% of your score. So, if you’ve been heavily using your credit card and not paying off the balance, your score will be negatively impacted. Carrying a large balance from month to month can lower your score. Heavy credit card usage may cause potential lenders to assume you’re struggling to make ends meet and are using your credit cards to bridge the financial gap. It’s best to keep your credit usage below 30% of your available credit.

6. Only paying the minimum

Making the minimum payment on your credit card will just dig you deeper into debt. This is because paying the minimum increases the amount of time it takes to pay off your balance and results in higher interest payments. It’s best to pay more than the minimum so you can pay off not only the principal but also the interest.

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