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3 Common Credit Card Mistakes to Avoid

Credit cards are a simple and convenient way to make purchases, which explains why so many people have them. A 2018 survey reported that about 83% of Americans age 30 to 49 have at least one credit card.

Convenience is one thing, but racking up a lot of debt on credit cards is another. In 2018, US credit card debt hovered at $870 billion. Many consumers find themselves caught up in too much of it. Using your card the right way will help you stay out of debt and maintain a healthy credit score so you can live the life you want to live!

Here are some credit card mistakes to avoid:

Not paying enough

Possibly one of the most significant contributors to building card debt is making only the monthly minimum payment. This amount is a tiny fraction of the balance and, every month you pay the minimum, you're racking up more interest.

Check out this payment calculator to open your eyes to ​the da​​​nger of paying only the monthly minimum. The best option is to pay your balance off each month. You can keep your credit card balances reasonable by not charging for things that aren't​ in your monthly budget.

Paying late or not at all

Making late payments is a costly blunder. You could be charged a late fee, which could fall somewhere between $25 and $35. Also, your interest rate may increase. Your late payment(s) may also show up on your credit report. Even one late payment can severely damage your credit score. The moral is: pay your bills on time!

As detrimental as paying late is, not paying at all is even worse. When your credit card company thinks you're not going to keep paying on your balance, they may “charge off" your account. Charge offs can be very damaging to your credit score, plus you'll still owe your creditor the money.

Not keeping an eye on your account

You will be better at avoiding late payments by checking your statement every month. Whether electronic or paper, your statement will remind you when your payment is due.

Besides keeping you on track, in this age of increasing identity theft, you need to ensure your statements don't include fraudulent charges. If you do spot unusual activity on your account, report it right away to avoid being held responsible for the charges.

Another value of checking your statement each month is seeing where your money is going and if you're spending outside your budget.

Don't go overboard

A final word of advice is to keep the number of cards you carry and your credit limits manageable. The quickest way to go into debt is by having too many credit cards bills to pay and too much credit available to spend. Work with your credit union to decide what the right amount of total credit for you is, given your current income and spending habits, your ability to save and your future goals.

Want more helpful financial tips, tools and resources? Check out Wright-Patt Credit Union's online Education Center. You can also sit down with certified financial counselors from our trusted partners at GreenPath Financial Wellness to review your goals, budget and come up with a debt management plan. Counselors are available to meet with you on-site at many of our locations. Click here to learn more and schedule an appointment.