Aquib Nawab

Credit Card Mistakes to Avoid

Personal Finance

Image Credit: Freepik

1. Paying Late

Late payments are one of the biggest credit card slip-ups. They negatively impact your credit score. Set up reminders or automatic payments to avoid late payments.

Credits: Canva

Credits: Canva

2. Making Minimum Payments

Paying only the minimum keeps you in debt longer. For example, paying the minimum on a $1,000 balance with 20% interest will take nearly 10 years and $1,056.74 in interest to pay off.

3. Running High Balances

Having high balances or maxing out your card can hurt your credit score. Your credit utilization ratio should be below 30%. Lenders may view high utilization as irresponsible debt management.

Credits: Canva

Credits: Canva

4. Not Monitoring Transactions

Regularly check your credit card activity to detect fraudulent charges early and avoid expensive consequences. Cybercriminals are on the rise, and ignoring fraud can be costly.

5. Not Knowing Credit Card Terms

Reading credit card terms can prevent unexpected fees. Understand introductory rates and balance transfer fees to avoid surprises by reviewing the fine print.

Credits: Canva

Credits: Freepik

6. Choosing the Wrong Card

Different cards serve different financial goals. Research the best options for your needs and lifestyle, and avoid cards with unnecessary fees.

7. Overspending on Credit Cards

Overspending can lead to financial trouble. Avoid making purchases solely for rewards, and don't justify extra spending for minimal rewards.

Credits: Canva

8. Applying for Too Many Cards

Multiple credit card applications can harm your credit score. Space out applications and be strategic, waiting at least 90 days between applications.

Credits: Canva

9. Canceling a Credit Card

Closing a credit card can negatively impact your credit. It can reduce your credit limit and increase utilization ratio. Consider alternatives like product changes or downgrades.

Credits: Canva

10. Not Requesting Credit Limit Increases

Higher credit limits can improve your credit utilization ratio. Request increases once a year if needed, but be cautious not to increase your balance along with the limit.

Credits: Canva

Make Better Money Decisions

Stay updated with the latest finance ideas and trends with Wealthcounty.