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10 worst credit card mistakes

Be sure to read the fine print, and pay your balance on time.

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There are many advantages to having a credit card but when used improperly, you can easily become mired in something very costly that has grown out of your control. Learn about the common mistakes people make and take note of these best practices to get the most from your credit card.

Credit card mistakes & best practices

As useful as credit cards can be, anyone making the following credit card mistakes is going to cost themselves money and may even land themselves in some serious financial difficulties. Pay attention to the best practices to make sure you’re maximizing the benefits of your credit card. These are the ten worst credit card mistakes you can make:

1. Paying interest.

If you spend more than what you can pay off each month, you will be charged interest on your purchases, and interest is just money down the drain. Interest compounds and grows quickly, meaning that if you’re not careful it doesn’t take long to get into unmanageable debt with a credit card.

How to avoid it?

Pay off your entire statement balance each month or get a 0% intro APR credit card. This way you can enjoy the perks of a credit card without the unnecessary expense of interest.

2. Making cash-equivalent transactions.

When you take cash out of an ATM or make gambling transactions on your credit card, you will almost always be charged a cash advance fee and interest will accrue at the higher cash advance rate starting from the day you make the transaction.

How to avoid it?

Unless it’s an emergency, don’t use your credit card for cash-equivalent transactions. If it is an emergency and you do need to do so, pay it off as soon as you can to avoid as much of the financial penalty as you can. If you frequently need to take out cash advances, compare cards with low rates, or get a card with a 0% intro cash advance APR.

3. Spending for rewards.

Credit cards entice you to spend more with bonus points and rewards for your spending. It’s tempting to buy things you don’t need or haven’t budgeted for when points are in the picture.

How to avoid it?

Buy what you need and what you have budgeted for. If you’re paying more for the card than what you’re earning in rewards, consider a card more suited to your budget and spending style.

4. Holding too many credit cards.

This can be an issue if you can’t keep track of your spending and balance payments.

How to avoid it?

Choose which credit card(s) serve you best and cancel the rest. You’ll be able to keep track of your spending and make the most of your cards and related perks. Keep in mind, closing your cards may affect your credit score. If you’re not keen on closing your cards, learn how to manage multiple cards.

5. Maxing out your credit card.

Spending right up to your credit limit can make you look like a risky borrower and may decrease your creditworthiness and cost you overdraft fees.

How to avoid it?

You don’t have to wait for your statement to arrive to pay off some of your balance. Pay some of it down before you add more charges to keep you from maxing out. But if your credit limit is too low for your income, consider requesting a credit limit increase.

6. Keeping a high-interest debt.

If you’ve racked up credit card debt and are struggling to pay it off, keeping it on a high-interest credit card can cost you an unnecessarily high amount of interest.

How to avoid it?

Transfer your high-interest debt to a new credit card with a 0% interest on balance transfers and pay off your debt over a longer period of time. This will help you save on interest.

7. Not immediately reporting a lost or stolen card.

If you’ve misplaced your credit card or suspect it may have been stolen, it is your responsibility to take action. Not doing so could at best create a major headache, or at worst leave you liable for fraudulent transactions.

How to avoid it?

Even if you find it later in an old jean pocket, it is safer to call your bank and let them know. Sometimes, you can block the credit card without having to completely cancel it.

8. Not checking your statements and recent transactions.

Pay with plastic and you can bury the price and repayment deep in your mind, and adapt a ‘pay now, worry later’ attitude.

How to avoid it?

Most credit cards these days are linked to banking apps accessible on your smartphone. Periodically check your transactions to stay on top of your balance and pick up on any unnecessary or fraudulent transactions.

9. Not reading the fine print.

This can be a terrible mistake. The fine print contains your rewards program, and fees and interest. Missing out on this important info can cost you money.

How to avoid it?

Read through the terms and conditions, check out product reviews or call the bank to ask questions. Make sure you understand what you’re getting, how to get it and what you need to pay.

10. Failing to compare credit card offers

There are hundreds of credit cards on the market and choosing one without doing your research could lead to a rejected application or the acquisition of a credit card that doesn’t suit you.

How to avoid it?

Make sure to consider the annual fee, interest rate, promotional offers, any rewards programs and other perks like travel insurance or purchase protection.

Compare credit cards

Now that you know what credit card mistakes to avoid, you might feel more prepared to get a card or add to the cards you already have. Compare some credit cards to find the best one for you.

Name Product Filter values Rewards Purchase APR Annual fee
Citi® Double Cash Card
Up to 2% cash back on purchases (1% when you buy plus 1% as you pay)
13.99% to 23.99% variable
$0
This one of the most valuable flat cashback cards. It comes with 2% cash back (1% when you buy plus 1% when you pay) and 18 months months to pay off transfers.
CardMatch™ from creditcards.com
See terms
See issuer's website
See terms
Use the CardMatch tool to find cards you're likely to qualify for with your credit score, without a hard pull on your credit.
Citi® Diamond Preferred® Card
N/A
0% intro for the first 12 months (then 13.74% to 23.74% variable)
$0
A market-leading balance transfer intro APR of 21 months and 12 months on purchases. Plus Citi Entertainment℠ for deals on dining and going out.
Citi Rewards+℠ Card
Earn 2x points at supermarkets and gas stations on up to $6,000 annually, then 1x points after that and on all other purchases
0% intro for the first 15 months (then 13.49% to 23.49% variable)
$0
Get rewards on gas and groceries with no annual fee. Ideal for everyday use, it's the only card that rounds purchases up to the nearest 10 points.
TD Cash Credit Card
3% on dining, 2% at grocery stores and 1% on all other eligible purchases
0% intro for the first 15 billing cycles (then 12.99%, 17.99% or 22.99% variable)
$0
3% on dining and 2% on groceries make this a valuable card for food purchases. Use it while traveling, too, with no foreign transaction fees. Available in: CT, DC, DE, FL, MA, MD, ME, NC, NH, NJ, NY, PA, RI, SC, VA, VT
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Compare up to 4 providers

Bottom line

Not being aware of the worst credit card mistakes can cost you money. Because of that, make sure you keep an eye on these mistakes and use the best practices to stay on top of your credit card game.

And if you still haven’t found the righ credit card, compare multiple options until you do.

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