7 Common Credit Card Mistakes to Avoid
Why is your credit score falling since getting a credit card? Isn’t is supposed to be helping?
Uh oh….you’re probably making one of these common credit card mistakes!
Credit cards are a great way to build credit and make purchases without having to fork over a ton of cash upfront.
They have the potential to make our lives much more convenient and can give you a piece of mind that you can cover an urgent expense.
(If you don’t have that Emergency Fund set up yet!)
But if used improperly, they can quickly spiral out of control and become a source of stress.
Avoiding and reducing stress is the name of the game here at FreedAmbitions, so lets try our best not to go there.
Whether you’re just starting out with a new credit card or you’ve been using one for years.
It’s important to understand the worst credit card mistakes that many people make when using them.
To avoid the risks associated with credit cards, steer clear of these seven top credit card mistakes that many credit card users make.
From overspending to ignoring your statements, these credit card no-nos could cost you big time.
Read on to learn what mistakes to avoid like the plague.
Not Paying Your Bill on Time
This is perhaps the most common credit card mistake that many people make…..
….but it is also one of the easiest credit card mistakes to avoid.
And I get it..life gets busy!
You’re working, driving kids to practice, cooking, cleaning, taking care of everyone!!
With everything going on, it’s easy to forget to pay your bill on time, especially if you have multiple bills due each month.
One thing I know for certain – Never rely on your own memory to be sure the bills are paid on time!
I am one of the most forgetful people in my house.
Without my calendar app…I would be more than just the hot mess I am…..I would be lost!
A couple ways to avoid missing a payment:
Set up auto payments
The best way to avoid this mistake, is to set up automatic payments.
This way your payment is made automatically each month from your bank account.
This will help ensure that your payment is always made on time and will save you from having to remember to make it yourself every month.
Use a bill tracking app
Use a bill tracking app to organize everything in one place and get reminders of when bills are coming due.
I have tried out the below two and they worked great in my experience
1. Mint
Personally, I have auto payments set up for some bills and not for others.
I have everything listed out in my bill tracker though either way.
I am paid on the 1st and 15th of each month from my fulltime job.
This makes it easy for me to know when to set up my automatic payments.
You will want to look at when all your bills are due and come up with a budget for what will be paid, with what income you receive and on what date.
Not Paying Your Balance in Full Every Month
Okay yall, please don’t make the classic credit card mistake to avoid of carrying a balance on your credit card.
I know it’s tempting to just pay the bare minimum, but trust me, the interest and late fees will add up faster than you can say “free shipping.”
Not only does carrying a high balance from month-to-month result in paying interest on that high balance, but it’ll also hurt your precious credit score.
The best practice is to pay off your full balance each month or at least stay within 30% of your total available credit limit.
So if you’re stuck with a balance, cut back on the spending and throw extra cash at it until it’s gone.
Maxing Out Your Card
Using your credit card up to its limit is another common credit card mistake that should be avoided at all costs.
Like I mentioned above in the last mistake –
Not only does maxing out your cards increase your risk of going into debt, but it also decreases your available credit limit which can hurt your credit score over time.
To avoid maxing out your card, only use it for necessary purchases and try to keep your balance below 30% of its limit at all times.
Neglecting Your Credit Card Statements
Now this is a common credit card mistake that many dont think about.
It’s important to keep track of all of your transactions and add up how much money you’re spending every month.
Pay attention so don’t go over budget or find yourself surprised by an unexpected bill down the line due to late fees or interest payments on unpaid balances.
It’s also important to double check that all transactions listed on your statement are accurate.
If there are any discrepancies, dispute them with the merchant immediately!
This will help protect against fraud and unauthorized charges while ensuring that any errors don’t affect your score negatively in the future.
Not Shopping Around for Best rate/Rewards
Another common credit card mistake to avoid is not doing your homework!
Don’t be afraid to shop around for better deals when it comes to your credit cards.
Many companies offer various rewards programs and discounts for customers who use their cards, so make sure that you’re taking advantage of these offers whenever possible!
A few things to look at when comparing what credit card is right for you:
1. Interest rate/APR
2. Fees
3. Rewards programs
4. Credit limit
5. Payment flexibility options / grace period for payments
You can read more about how to compare credit card offers here.
Applying for Too Many Credit Cards
So here is a common credit card mistake that a lot of people make because they just don’t understand how their credit score is calculated.
If you go buck wild and apply for more than two or three credit cards in a hot minute, your credit score is gonna take a nosedive significantly.
Why, you ask?
Because it tells them fancy credit bureaus that you’re relying too much on debt and not enough on good old fashioned savings or income.
If you do decide you need additional cards, make sure that you spread out the applications over time so that they don’t all appear on your report at once.
This will help give you access to more lines of credit should you need them in the future without tanking your score.
Resist the temptation of Cash Advances
Cash advances are one of the worst credit card mistakes that you could do.
Not only are they extremely expensive due to high interest rates, but they also cost more in fees and require immediate repayment.
Plus, cash advances don’t usually qualify for rewards points or any other benefits that come with using a regular credit card.
My word of advice….just don’t do it.
Ambitious Thoughts…
Alright, listen up folks!
If you’re going to use a credit card, you gotta do it right.
That means paying your bills on time, not carrying a balance, not maxing out your cards like it’s a game of credit card Jenga, spacing out your applications, checking your statements like a detective, shopping around for better deals like a bargain-hunting pro and just saying no to those cash advances.
If you follow these rules, you’ll be a credit card master and reap the rewards of good credit scores and financial freedom.
So get out there and conquer that plastic like the responsible adult you are!
PS. Share this with your buddies to they can rock their credit cards too!
