Home Finance Common Credit Card Mistakes You Should Avoid Making

Common Credit Card Mistakes You Should Avoid Making

Your credit card is a great asset, given that it can help you pay for expenses and build your credit score. But, if you use it incorrectly, it can cost you a lot of money. Carrying a balance on your card can be an expensive mistake and could even ding your score if you don’t clear your balance on time. That’s why we’ve made a list of credit card mistakes you should certainly avoid making.

Carrying a Balance Every Month

One of the most dangerous myths about credit cards is that carrying a balance on your card can improve your credit score. In reality, this actually hurts your score and could cost you money. Carrying a balance on your card regularly affects your credit utilization rate, which negatively affects your credit score.

Making the Minimum Payment Every Month

Yes, making the minimum payment is better than making no payment. But, as far as possible, try to make the entire payment every month. By not paying your bill in full, you may be racking up high-interest charges and your debt could snowball, thus, making it harder for you to clear your debt.

Missing a Payment

Missed payments or late payments can affect your credit score significantly. If you’ve made your payment after the due date but before the 30-day cut-off, you likely won’t see a drop in your credit score but you may incur a penalty. If you pay after the 30-day grace period, your payment default will likely be reported to the credit bureaus. So, it’s best if you set up autopay to ensure that your payments are always made by the due date. And, if autopay isn’t an option for you, create calendar reminders and add email notifications.

Not Reviewing Your Statement

It’s important that you check if the transactions that are listed on your bill are correct, so you can take action in case of reporting errors or fraudulent transactions. It’s a good idea to check all your transactions a few times every week to verify if everything is as it should be.

Not Knowing Your APR and Other Fees

Your bank likely communicated the APR and other charges to you when you were approved for a credit card. If you don’t remember these charges, make sure to go through your credit card documents so you are aware of what you are being charged. If you’re paying too much in interest charges, don’t be afraid to switch to a different card or credit card company.

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