Skip to main content
Credit Cards

Learn About Credit

Responsible Credit Card Use and Mistakes to Avoid Discover 5 credit card mistakes to avoid to strengthen your overall financial health. Learn more about responsible credit card use. responsible credit card use, credit card mistakes, credit card responsibility Bank of America 5 credit card mistakes to avoid These financial decisions can hurt your credit rating Credit and its consequences. Your credit card habits are one key indicator of your overall financial health. Without responsible, disciplined use of a card, you might build up high-interest debt, incur late payment fees and damage your credit score. To steer clear of those pitfalls, try to avoid the following five common credit card mistakes Mistake #1. Confusing wants for needs A credit card doesn't mean you shouldn't live within your means. Little impulse buys can add up over time and can lead to some pretty hefty credit card bills. If you don't really need it, you may want to think twice before buying it. Mistake #2. Making late payments You may think it's not a big deal to run a few days late on a monthly payment. But remember that your credit card habits, like any other loan, directly affect your credit report. When a payment is late, it indicates to potential lenders that you may not be responsible when taking out other loans down the road. And while it varies on a case-by-case basis, one 30-day late payment could result in at least a 50-point drop on your credit score even if you've never missed a payment before, according to Equifax. So stay on top of your monthly bill, like you would any other loan, to protect your credit score and avoid putting an unnecessary blemish on your record. Mistake #3. Paying only the minimum If you have a balance on your credit card and make only the minimum monthly payment, you'll face the mistake of mounting interest fees. For example, say you use your credit card to buy a new computer for $1,000, and then only make minimum payments. On a card with a 15.8% percent**APR, it could take you more than five years and over $350 in interest alone—if you don't charge anything else along the way—to get the balance back to zero. Learn how to save by paying more than the minimum. Mistake #4. Closing accounts too quickly American credit card owners hold an average of 3.7 credit cards, according to a recent Gallup poll. If you're working to pay down balances on multiple cards, you might be tempted to close the first account you pay off completely. But think that decision through carefully: One of the factors your credit score takes into account is the length of your credit history. So it's especially important to maintain a credit card you've held for a long time. Mistake #5. Maxing out your account If you're close to hitting your credit limit, your credit utilization rate—the ratio of your total balance to your total available credit—is likely hurting your credit score. Experts recommend that you don't let your utilization rate go above 30 percent. You should be responsible and set specific goals for tackling your credit card debt sooner rather than later. Reap the rewards of responsible credit card usage Credit cards enable users to earn attractive rewards, better secure their purchases and build a good credit history. But they require careful use and monitoring. To learn more about responsible credit card use, read up on key facts about smart card usage. If you adopt a diligent stance toward your credit activity, you'll protect your bottom line while enjoying the various advantages of these financial tools.

5 credit card mistakes to avoid