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The Worst Credit Card Mistakes You Should Stop Making

August 1, 2022 | Posted by: Marc Crossman

There are several important benefits of using a credit card to shop. You can earn rewards, build your credit and take advantage of points and perks. But while shopping with a credit card can be convenient, there are also certain risks you need to be aware of.


Paying your credit card bill late

Your payment history is a major factor of your credit rating and accounts for more than 30% of your overall score. A late payment on your report won’t go away for 7 years.


Maxing out your credit cards

The second biggest factor in determining your credit score is the percentage of available credit that you are currently using. Called the 'credit utilization ratio,' this is calculated by dividing the amount you owe by your total limit.


Making minimum payments on your card

Your minimum payment is the lowest amount that your card issuer will allow you to pay toward your bill for any given month. The minimum payment is determined by the balance on your credit card and your interest rate.


Taking out a cash advance

Cash advances are a method of borrowing money from your credit line. Convenient as it may be, a cash advance uses an interest rate that is typically significantly higher than your standard APR. Most cards will also include a transaction fee of 3 to 5%.


Chasing credit card rewards with abandon

If you're thinking of opening a new credit card account to get money back on your purchases, you can best manage rewards by considering your lifestyle. Heavy travelers should look for frequent flyer rewards. If you spend a lot of money on groceries or drive your car often, look for cash back rewards. 


Not paying off big purchases during a 0% APR period

Whether you just opened a 0% APR card -- which offers interest-free debt for a specific promotional period -- or a balance transfer card -- a credit card designed to accept debt from other cards -- make sure you read the fine print. Oftentimes, there's a fee to tranfer the balance, commonly 3% of the balances transferred.


Canceling your credit cards

Even if you have paid down your balance on a credit card, you shouldn't cancel your account. Closing your account would affect your length of credit history and credit utilization ratio, two important components of your credit score.


Applying for too many credit cards

Each time you apply for a new credit card, your credit score can drop slightly due to a “hard” credit check. Hard credit checks require your consent and involve a full credit summary from a credit bureau. 'Soft' credit checks occur when you view your credit report or a financial company requests a summary without your consent, and they don't affect your credit score.


Not checking your billing statements regularly

Tracking your credit card spending isn't the only reason to check your billing statement. You should thoroughly comb through your transactions to make sure there aren't any potentially fraudulent charges you didn't make. The sooner you discover you're a victim of identity fraud, the sooner you can contact your card issuer.


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