What is the biggest mistake you can make when using a credit card?

Not paying on time Sometimes, schedules are busy and budgets are tight. But it's best to always pay at least part of your credit card bill on time. Missing or late credit card payments can have a big impact on your credit score and fees.

What is the single worst thing you can do to your credit score?

Making a late payment Even one late payment on a credit card account or loan can result in a credit score decrease, depending on the scoring model used. In addition, late payments remain on your Equifax credit report for seven years. It's always best to pay your bills on time, every time.

What is the biggest killer of credit scores?

1. Payment History: 35% Making debt payments on time every month benefits your credit scores more than any other single factor—and just one payment made 30 days late can do significant harm to your scores.

What is the number 1 rule of using credit cards?

Pay your balance every month Paying the balance in full has great benefits. If you wait to pay the balance or only make the minimum payment it accrues interest. If you let this continue it can potentially get out of hand and lead to debt. Missing a payment can not only accrue interest but hurt your credit score.

What is one of the biggest dangers in using a credit card?

Most of your payment will go to paying interest . Since credit cards carry high interest rates, it can take a long time to pay off debt when only making the minimum payment. If you miss a credit card payment, then the bank can charge you interest on top of the original payment owed.

What is the biggest credit trap?

Minimum monthly payment. Paying only the minimum is a debt trap because it can take years to repay a sizable balance that continually accrues interest. Tip: If you can't pay your monthly balance in full, pay as much as you can above the minimum.

What has the most severe effect on your credit score?

1. Payment History : 35% Your payment history carries the most weight in factors that affect your credit score, because it reveals whether you have a history of repaying funds that are loaned to you.

What are the 3 P's of bad credit?

These three pillars are the keys to effective credit analysis and can also be referred to as the 3 P's: Policies, Process and People . Policies (or procedures) refer to the overall strategy or framework that guides specific actions.

How to aggressively pay off debt?

Make debt payments beyond the minimum . Making more than your required minimum payment can help you pay off debts more quickly and save money in interest charges. Earmark unanticipated funds, such as your tax return or a bonus, for debt payments.

What is one pitfall of credit cards?

Perhaps one of the riskiest things to do with your credit card is to take out a cash advance. Interest starts accruing on the amount of cash you withdraw immediately — there's no grace period like regular purchases. And you'll likely incur a cash advance fee, which can be around 5% of the advance.

What bad credit profile issue should be the most concerning?

Your payment history is the single most important factor in your credit score. Paying on time every month will have the biggest impact on your credit history. Missing payments can lower your score quickly and significantly.

What credit score should I be worried about?

Generally speaking, a good credit score is 690 to 719 in the commonly used 300-850 credit score range. Scores 720 and above are considered excellent, while scores 630 to 689 are considered fair. Scores below 630 fall into the bad credit range .

Top Credit Card Mistakes - What credit mistakes are the most serious? (2024)

Here are the top credit card mistakes to stop making. These can hurt your finances, cause you to be in more debt, and more. Even though I love credit cards because of their many benefits, I understand that they aren’t for everyone. A family member of mine once struggled with credit cards, and they found…

Here are the top credit card mistakes to stop making. These can hurt your finances, cause you to be in more debt, and more.

Even though I love credit cards because of their many benefits, I understand that they aren’t for everyone.

A family member of mine once struggled with credit cards, and they found that using a cash only budget was the best way to stay out of credit card debt. Fortunately for them, they were able to recognize their credit card mistakes and found a way to make sure they weren’t adding any debt. Part of that was being proactive and noticing they had an issue with them early on.

However, others are not as lucky.

Some people rack up large amounts of credit card debt, and they do so because they aren’t aware of the credit card mistakes they might being making. According to a study done by NerdWallet, the average household in the United States (who has debt) has an average credit card debt of $15,482.

When you add that all up, it equals $927 billion worth of credit card debt for American consumers. They break this down further and show that the average U.S. household pays around $900 in annual interest. Also, 41% of consumers say they go into credit card debt because they are spending more than they can afford, and 33% say they are adding to their debt because they can’t cover their monthly expenses.

To add to those statistics, the National Foundation for Credit Counseling released their 2018 Financial Literacy Survey and found that one in four Americans don’t pay their debts on time, one in 10 have debts in collections, and 38% of Americans carry debt from month to month.

I find these statistics incredibly saddening, especially when some of this debt is completely avoidable.

5 credit card mistakes.

1. Ignoring the terms.

Before you sign up for a credit card, you should understand all of the common terms and learn how to use a credit card. Sadly, many people do not fully understand credit card terms and that’s a leading cause for why some fall into credit card debt.

You should do your research and understand:

Interest rates and how they work.
Minimum payments, which you can read more about below.
What happens when you only pay the minimum payment.
How your credit card use impacts your credit score.
What 0% interest might really mean.
How to avoid getting into trouble with rewards cards.
And more!

While these things apply to all credit cards, not every credit card is the same. So, you should know and understand the terms of each of your credit cards to really avoid this credit card mistake.

I know that the process of researching and understanding these basic credit card principles may seem like a lot of work, but if you don’t understand how your credit cards work, you may wind up in debt or farther into debt than you already are.

Your credit cards can work for you if you are careful, but if you aren’t, they can wreck your finances and your future.

2. Buying items when you can’t actually afford them.

Credit cards are not free money, but too many people treat them like they are. If you are using a credit card, you should always make sure that you have the money in cash or in your personal bank account before you think you can afford something.

That jacket, dress, video game, and so on aren’t worth the debt that they may accrue if you use a credit card to purchase them without really being able to afford it. A simple $50 dress may balloon into hundreds of dollars of credit card debt because of interest fees.

If you are finding that you are struggling with whether or not you can afford something, there are several things you can do.

Wait 24 hours, at least, to make that purchase.
Think about the other things you could use that money for.
Think about how much time you will have to work to pay for it.
Think about whether you’ve made a similar purchase that you’ve regretted.

If you just take a minute to think about those four things, you may realize that you can’t actually afford the purchase in the first place.

If you are wanting to get better about tracking your spending, check out Personal Capital. This free online tool tracks your purchases, your debt, investments, and more.

3. Forgetting to pay your credit card bill.

This credit card mistake is one that always shocks me. Even if you have the money to pay your credit card balance in full each month, that’s only good if you remember to pay your bill each month. I honestly can’t tell you how many people have told me that they don’t remember to pay their bill each month. And, many of these people could have paid the balance in full!

Paying your credit card bill late can lead to many problems. It can lead to late fees, added interest, and it can negatively affect your credit score.

If this is one of the credit card mistakes you are making, you can set up reminders on your phone, put due dates on your calendar, and more.

4. Paying only the minimum payment each month.

This is probably one of the most common credit card mistakes. Some make this mistake because they don’t have the funds to pay their full credit card balance each month, and if that’s the case, you may want to find ways to better assess your purchases before you make them.

Others only pay the minimum because they believe that’s all they need to pay in order to avoid interest charges. YES! Many people actually think this, and this is why #1 in this post is so important. Everyone needs to fully understand what “minimum payment” means and what happens if that is all that you pay.

Here’s a basic breakdown of what minimum payments are:

Minimum payments are basically the smallest amount your lender will let you pay each month.
Minimum payments lead to paying more in the long run because of interest charges.
While minimum payments may keep you in good standing, they can affect your overall credit score.

You should always try to pay more than the minimum. If you do not, you will have to pay interest charges, which may inflate your credit card debt significantly each month.

PAYING ONLY THE MINIMUM IS NOT ENOUGH PEOPLE!

Related: 12 Money Hacks That Will Help You Save More Money

5. Spending money you normally wouldn’t spend in order to rack up credit card rewards points.

Credit card reward points are great, but if you spend more than you can actually afford so that you can earn “free” vacations, gifts, and more, nothing is actually free.

Some will spend more money than they have so they can reach the spending requirement needed to earn rewards points. Remember, though, those rewards are only rewards if you are using your cards responsibly.

If this is one of the credit card mistakes that you are making, this can spiral out of control if you do not keep track of how much money you are spending.

To successfully churn credit cards, you must have good to excellent credit scores, have your finances already in order, and have great organizational skills. If that doesn’t apply to you, you can always work on improving your credit score and your financial situation, which starts by first learning which of the above credit card mistakes you might be making.

Do you have credit card debt? Have you ever been guilty of making any of these credit card mistakes?