Get the most from your credit card by steering clear of these common credit card missteps.

4 minute read

Credit cards can get you through a lean month or an unexpected emergency like an expensive auto repair. But credit cards can also get you into financial trouble if you let bad credit card habits become the norm. For one thing, you can hurt your credit score by using up too much of the card’s available credit.

But that’s only one bad habit. There are plenty of other credit card habits that can mire you in debt and cost you hundreds of dollars in interest. So, how can you break bad credit card habits in 2022?

First, you must know the bad habits you’re up against. Then you can take steps to clean up those habits and replace them with better ways to get the most from your credit card. Here are four bad credit card habits to break in 2022.

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1. Paying late

When money is tight, it’s tempting to let your credit card due date come and go without paying on time. Maybe you plan to take care of it next week, or even next month. That’s a bad idea — and a bad habit you don’t need.

For one thing, you’ll shell out up to $40 or so for the credit card late fee. And if you pay more than 30 days after the due date, the credit card issuer may report late payments to major credit bureaus, which can lower your credit score.

If you have trouble keeping track of payment due dates, sign up for email or text reminders from the credit card company. That way, you can make sure you always pay by the due date.

Find out: How to Build Credit Without a Credit Card

2. Making only minimum payments

Paying only the minimum payment on your credit card statement might seem like a pretty good deal, since paying just a small amount each month frees up more money for other things. But paying only the minimum payment every month is a bad habit and a terrible idea.

That’s because when you make only the minimum payment, you could extend credit card debt for years. And you’ll pay a large amount of interest along the way. To get an idea of how much you’ll pay over time when you make minimum payments on a credit card, type the figures into a credit card interest calculator. You may be shocked by the results.

Here’s an example. If you have a $4,000 balance on a card with a 16.22 percent APR and make only the minimum payment (in this case, 3 percent of the balance), it will take nearly 12 years to pay the card off. And you’ll pay a total of around $6,800, including interest, on that balance over time.

Pay as much as you can each month on your credit card. Better yet, pay off the entire statement balance every month. That way, you won’t have to pay iinterest, and you can keep the balance at an amount you can afford.

Find out: 6 Ways to Build Credit When You Have No Credit History

3. Taking cash advances

When you need cash, hitting the nearest ATM for a cash advance on your credit card is a quick way to get your hands on some spending money. But that convenient transaction comes at a cost. Not only will you pay an ATM fee, you’ll also pay a cash advance fee that’s typically around 5 percent or $10 per transaction, according to personal finance site Bankrate.

You could also end up paying a lot more than fees, since most credit cards charge a much higher interest rate for cash advances. The average cash advance interest rate ranges from 17.99 percent to 29.99 percent, according to Forbes. If that’s not enough of a deterrent, most credit cards also don’t have a grace period for cash advances. So, interest on the amount starts accruing immediately instead of the typical 21-day grace period.

To avoid ATM cash advance emergencies, withdraw enough cash for the week from your bank’s ATM to avoid fees and higher interest rates.

4. Maxing cards out

When you get a card with a $5,000 credit limit, staying well under that limit seems easy enough at first. If you’re not careful, however, a few expensive emergencies or repairs can max out a credit card in no time at all.

When that happens, you may no longer have credit available for emergencies or to help you get by until payday. Maxed-out credit cards can also hurt your credit utilization rate – the amount of your debt to available revolving credit – which accounts for around 30% of your credit score.

5. Making purchases simply to earn rewards

If you’re gradually racking up rewards points or miles on a credit card with necessary purchases that you try to pay off each month, that’s great. You may even pay a large bill such as home insurance with the card to earn rewards and then pay off the balance the same month.

However, if you’re making tons of purchases with the card just to earn rewards without keeping the balance low or paid off, you can end up paying way more in interest than you’ll receive in travel miles or cash rewards.

Find 0ut: 7 Steps to Repair Your Credit and Increase Your Score

6. Carrying a high balance

When you carry a large balance on your credit card, that’s a bad habit that can hurt your credit score. That’s because your credit utilization rate — the ratio of revolving debt to your available credit —  accounts for about 30 percent of your credit score. Ideally, you should keep your revolving debt below 30 percent for a higher score.

Not sure where you stand with your credit utilization rate? Add up all your credit card credit limits and all your credit card limits. For example, if your total credit for all credit cards is $10,000, and the total for all balances is $5,000, your credit utilization ratio would be 50 percent. If your credit utilization rate is above 30 percent, work on paying off balances to improve your credit score.

Find out: 8 Mistakes to Avoid When Trying to Improve Bad Credit

7. Procrastinating on a balance transfer amount

It can be a smart move to transfer a large balance on a high-interest credit card to another credit card with an intro 0% APR for a year or 18 months. That way, you can avoid paying interest while hammering away at the principal during the intro period, maybe even paying off the full balance.

At the same time, it’s also easy to procrastinate on your payoff goal by making only small payments. Soon enough, though, the end of that intro period arrives – along with a much higher interest rate.

When transferring a balance to a card with an introductory 0% APR, figure out how much you must pay each month to pay off the balance before the promotional period ends. Then stick to your payment plan.

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About the Author

Deb Hipp

Deb Hipp

Deb Hipp is a full-time freelance writer based in Kansas City, Mo. Deb went from being unable to get approved for a credit card or loan 20 years ago to having excellent credit today and becoming a homeowner. Deb learned her lessons about money the hard way. Now she wants to share them to help you pay down debt, fix your credit and quit being broke all the time. Deb's personal finance and credit articles have been published at Credit Karma and The Huffington Post.

Published by Debt.com, LLC