7 Credit Card Don'ts That Are Probably Costing You Money

Credit cards have become a mainstay in most peoples’ wallets. They are a great alternative to cash because they’re easier to carry, more secure and provide an automatic purchase record. Additionally, some credit cards offer perks like rewards points and cash back.

Practicing good credit card habits, like paying your balance in full every month, can also result in zero interest charges and a higher credit score.

However, managing credit card spending isn’t always easy. Many consumers struggle to get—and keep—their finances under control. If you’re interested in shifting your behavior, here are some habits to avoid:

1. Only paying the minimum payment—The minimum payment always seems doable. If you get into trouble one month and can’t afford to make a substantial payment, the minimum is a way to get the bill paid on time and not incur additional fees. Right? Not so fast!

    

   Paying the minimum payment on time may result in no late fee, but you need to take into consideration how much it’s costing you in interest to carry that additional balance for another month—or more.

    

   Instead, try to pay your balance in full. Or, at the very least, a substantial portion. It may be worth going without other extras for a month or two if it’s going to help you pay off your debt.
    

2. Paying for everything with your credit card—You’ve probably heard that using your credit card often can really boost your rewards. That’s true—but only if you pay your balance in full (or close to it) every month. Otherwise, the value of the rewards or cash back you earn is eaten up by mounting interest charges.

    

   It’s dangerous to get in the habit of using your credit card for non-discretionary expenses if you haven’t established a good payoff plan. Otherwise, that $2 carton of eggs could end up costing you close to $20 or more.

    

   You’ve already budgeted for essentials like groceries, utilities and gas—so using your debit card may make more sense for these items.
    

3. Overspending to earn more credit card rewards—It always feels great when you’re earning rewards or cash back on things you’re purchasing anyway. Maybe you’ve planned and saved for a new refrigerator. Using your credit card to make the purchase and then using money from your budget to pay it off in full is a great way to make those rewards count!

    

   However, if you’re not great at managing your credit card debt—or your budget as a whole—you may want to reduce your spending until you get your debt under control.

    

   What about opening new credit cards to take advantage of the promotional benefits? Signing up for new credit cards can often provide some sweet perks—like free rewards points, a signing bonus or no interest for a limited time. Eventually, the perks come to an end, and all you’re left with is a credit card with a now, high interest rate and more debt.

    

   If you collect a lot of credit cards, it can also become difficult to remember all the payment due dates. It only takes a couple of late fees to obliterate those sign-up gifts or rewards.
    

4. Cash advances—Ever get those blank checks in the mail from your credit card company? If you happen to use them to pay a bill—or to treat yourself to something nice—you’re actually taking a cash advance on your credit card.

    

   Unlike regular credit card purchases, cash advances start to accrue interest immediately. They also come with a high interest rate, no grace period and additional fees.

    

   The best idea if you’re trying to pay off credit card debt? Send these checks to the shredder!
    

5. Late payments—In addition to incurring a fee, late payments can also affect your credit score. Set reminders on your phone or computer to keep track of due dates—or just circle the date on a wall calendar that’s easily accessible.
    

6. Not understanding the terms of your agreement—Don’t throw away that document with small print that comes in the envelope with your new credit card. This is your terms and conditions agreement, and it contains important information on interest, fees, fraud protection, reward offerings and redemption.

    

   For instance, learn how much you’ll pay if you carry a balance from month to month. It also lays out the fee amount for a late payment, parameters for using your card abroad or spending over your limit.

    

   If this agreement saw the inside of a garbage can long ago, you can likely find it on the card issuer’s website.
    

7. Ignoring your debt—There’s no doubt that debt can create a high level of stress. Some people reach their breaking point and choose to stop opening their bills altogether. Pretending the problem doesn’t exist or that it will eventually go away is not the answer.

    

   If you find yourself in this situation, the best course of action is communication. Call your credit card company and ask for help. You may find they are willing to reduce your interest rate or set up a payment plan. Don’t let embarrassment keep you from taking action.

Credit cards are valuable financial tools as long as they are used correctly. When it comes to credit card debt, there’s usually no quick fix. It takes time and understanding. Avoiding these mistakes can put you on the path to not only paying off your debt, but also improving your credit score and making your financial situation thrive.