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The Top 5 Credit Card Mistakes You Didn't Know You Were Making

Credit cards can be an awesome tool to use as long as you're doing it correctly. We've talked to the experts and found the most common mistakes people make and how they can be prevented.

Owning a credit card can be a huge asset when it comes to various financial tasks. However, when using a credit card, many of the little things you're doing can unknowingly hurt you in the long run. We talked to some financial professionals about the top five mistakes people make when it comes to having a card and what you can do to prevent them!

Mistake #1: Applying for Multiple Credit Cards
"Credit card offers are everywhere these days. They come in the mail, in email messages, in pop-up adds online, and they even get offered at the register at retail stores," Katie Ross, education and development manager for American Consumer Credit Counseling told MORE. "Each time an individual applies for a card there is an inquiry made on their credit. Each inquiry comes with a slight hit to that person's credit score, and applying for many cards can cause a significant drop in credit standing. Plus, keeping track of many cards is hard and often results in missing payments and ballooning debts."

Most of the time, it's best to apply for only one card a year and have one or two active accounts to keep track of each month! It keeps life and your finances much simpler.

Mistake #2: Making Only Minimum Payments
It can be oh-so-tempting to pay that (much smaller) minimum payment each month, but in order to be in the best financial standing possible, you absolutely should resist! By paying off only the minimum amount, you continue to carry a balance on your card that accumulates interest and causes you to pay much more in the end.

"It's easy for consumers to forget or lose track of how much money they've spent on credit because it doesn't come right out of their checking account," Ross says. "Carrying a balance for many months means that interest is being charged on that amount and making purchases more expensive over time. Plus, using more than 30% of the credit limit will drop your credit score and make it harder to pursue other financial goals. It is always best to keep the balance on cards small enough that it can be paid off completely at the end of each monthly billing cycle."

Charge only the things that you can truly pay off in full at the end of the month. If you can't afford it, don't buy it.

Mistake #3: Cancelling A Card You Aren't Using
When you aren't using a credit card, it can feel like it just makes sense to cancel it completely. However, it turns out that that's not the case.

"The longer you hold a card, the more valuable it is in your credit score determination," Kevin Gallegos, vice president of Phoenix operations with Freedom Financial Network told MORE. "Store a card away – or even freeze it – to avoid using it, but think very carefully before actually closing the account."

Closing a credit card will never help your score, but it can possibly hurt it. Unless you have a high amount of debt and can't control your spending, avoid cancelling a card as much as possible. It won't undo debt on the card, and it can hurt your credit history and credit score.

Mistake #4: Maxing Out Credit Lines
First of all, it can be really embarassing to get rejected at the grocery store if you've maxed out your credit limit. But even more importantly, you should be prepared to have wiggle room for surprise expenses to occur at any time.

Julie Pukas, head of US Bankcard and Merchant Services at TD Bank told MORE, "Cardholders should not max out their cards and instead make a point of leaving room on their line of credit for emergencies. In addition to establishing savings in the event of an emergency, cardholders should consider keeping 10-15% of their credit limit free. Staying around this utilization rate leaves some extra cushion for emergency car repairs, medical expenses and other unexpected expenditures."

Life happens, but don't let it catch you totally off-guard financially!

Mistake #5: Failing to check charges regularly.
We all could probably use a lesson in this one. Not only does regularly checking your expenses on your credit cards and through your bank accounts help keep you financially responsible and in control of your wealth, it also makes sure that no one else is getting their hands on your money.

"No matter how careful credit card users are, the threat of identity theft is real," said Gallegos. "Consumers should get in the habit of checking accounts online regularly, and at the very least, verify every charge on every monthly bill. Fraudulent charges sometimes will appear initially as a very small amount in the hopes that a user will overlook them."

We've all heard the horror stories—don't let it be you.



Hannah Marsh

Hannah is a Texas-born, Iowa-raised alumna of Iowa State University. When not writing trending content across several Meredith sites, she enjoys all things fitness-related, binge-watching "Whose Line is it Anyway" episodes and fully embracing her self-diagnosed peanut butter addiction.

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