Top 7 worst credit card mistakesCredit card debt—the majority of unsecured debt in the U.S.—is the number one reason consumers sign up for a debt relief program. Offered cards without any education on how to use them, many consumers get in over their head before you can say “credit or debit?” And unfortunately, racking up the debt is a lot easier than paying it off.
Below are some of the worst mistakes consumers can make when it comes to using plastic. Whether already in a debt relief program, looking for help with credit card debt or just trying to stay out of it, those that avoid these are more likely to succeed.
- Not reading the fine print. This is where you’ll find when that “too good to be true” introductory rate expires, how much you’ll be charged for balance transfers and other unsightly information. Get out that magnifying glass and read everything.
- Not shopping around. Mom was right—there are other fish in the sea. Compare what all the major card companies are offering, from interest rates to incentives, before signing your wallet away.
- Making only minimum payments. When a cardholder pays just enough of their balance off to avoid the late fee, they’re making one of the most common—and most costly—credit card mistakes. Paying only the bare minimum might be easiest short term, but it keeps consumers in debt longer and paying more on interest—often doubling and tripling the original cost of the debt.
- Not protecting credit card information. Millions of dollars get stolen every year from cardholders. Be careful of where you use your card and who you give card information to.
- Making late payments. This is one of the creditor’s favorite ways to make some extra cash. A payment made even one day late will tack on a late fee, damage your credit score and hurt your chances of earning a lower interest rate. An easily avoidable but common error.
- Overuse. Don’t join the thousands that have learned the hard way that credit cards aren’t free money. Separate wants and needs, make a budget (within your means) and stick to it.
- Getting too many. Not only will multiple cards often hurt a consumer’s credit and be difficult to manage, but they can add up to more than the cardholder can actually afford to borrow. Keep one for emergencies and let the others go.