24 Common Misuses of Credit Cards You Should Avoid

When it comes to having a credit card, there’s so much misinformation out there regarding how you should use it or not use it. That’s why it’s really important to research things for yourself to make informed decisions based on your situation. Let’s unravel what responsible credit card usage really looks like.

1. Maxing Out Your Card

Maxing out your credit card is not the way. It deals a blow to your credit score, sending signals of financial risk to lenders. You spend a little, you pay it down, and so on. It’s never a good idea to use all the money on your card just because it’s there. Impulse control, people!

2. Only Making Minimum Payments

Settling for minimum payments is a slippery slope. It makes you feel good because you’re like, “Wow, I made this $1,000 purchase, and I only have to pay $29 a month on it. What a steal!” Though it eases short-term strain, the long-term cost soars due to accumulating interest. Break the cycle – pay more than the minimum to effectively chip away at that balance.

3. Ignoring Credit Card Statements

I’m guilty of this myself, as I always thought it didn’t really matter what the statement said because I could remember what I spent on my own. No, no, and no, do not be like me. Statements reveal spending patterns, fraud alerts, and due dates. Keep an eye on things because regular check-ins empower you to catch errors, prevent fraud, and manage your finances wisely.

4. Using Your Card for Daily Expenses

This one is tricky because it’s not that you can’t use your card for everyday purchases. It’s when you’re using it to make purchases you couldn’t otherwise afford each day. You don’t want to live beyond your means and swipe the black stripe off your card like it’s free money because it isn’t. That’s a major red flag. In that case, your credit is probably best reserved for strategic purposes like major purchases or emergencies. 

5. Paying Your Bill Late

Don’t jeopardize your credit score with frequent late payments. Beyond the annoyance of late fees, it leaves a lasting mark on your financial record. Prioritize prompt payments to dodge extra charges and maintain a pristine credit reputation. I’m telling you, it gets out of hand when you let yourself get comfortable with paying a few days late. It turns into a few weeks and then a few months!

6. Applying for Multiple Cards at One Time 

Applying for a lot of credit cards at once to get one approved or because you want multiple options is not as good an idea as you may think. It triggers numerous hard inquiries, denting your credit score. Be strategic. I always say don’t go over two applications at once if you feel like you absolutely need more than one credit card. However, you should wait at least 90 days between applications, or even better, six months. If not, lenders may think you seem desperate when they see cluster applications, and they’ll wonder why you need so much credit at one time.

7. Recklessly Co-Signing for Someone

This one is fairly straightforward. Don’t let love or loyalty tie you down to a costly commitment. Co-signing without caution binds your financial fate to someone else’s. If they stumble, your credit takes a hit. Approach co-signing with extreme care because it can be challenging to get back on track if your loved one screws up too badly.

8. Regularly Taking Cash Advances

Taking cash advances is tempting, but it’s a costly habit. Interest rates soar, and there’s often a fee. Instead, reserve cash advances for true emergencies, as relying on them regularly drains your wallet and jeopardizes your financial stability.

9. Checking Your Credit Report

Don’t neglect your credit report; it’s your lifeline to improving your credit. Not checking it regularly means that errors or fraudulent activity can go unnoticed. You should consistently review your report and swiftly address any discrepancies. Trust me, once you let it get too bad, you may lose motivation to correct the items that are negatively affecting your creditworthiness.

10. Closing Old Credit Card Accounts

If you have old credit card accounts you don’t use anymore, you might think of closing them, but consider keeping them open. The length of your credit history matters, and closing old accounts could drive your credit score down. Keep those older accounts open to maintain a positive credit history and a higher credit score.

11. Carrying a Balance Each Month

Holding a balance each month isn’t just about interest—it affects your finances and credit score. It’s not one of those things you can just ignore. You want to strategize to pay your entire balance regularly to stay on track. This helps you steer clear of extra costs and maintain a positive credit standing for the foreseeable future.

12. Not Paying Attention to Rewards Expiration Dates

Take full advantage of the rewards—they’re there for a reason! Ignoring expiration dates is similar to leaving money on the table and walking away. No matter how much you have, there’s no reason not to enjoy this perk. You need to redeem rewards promptly and maximize the benefits your credit card offers before they slip away.

13. Using Credit for Investments

When you invest, you should be using money that is yours and not money that is borrowed. Using credit for investments is a risky move. There are several problems with this strategy. Beware of potential fraud. Additionally, high-interest rates and transaction fees can chip away at your returns, while missed payments might harm your credit score.

14. Falling for Credit Repair Scams

You’ve got to commit yourself to knowing all the tricks so you don’t end up in a situation with nearly irreparable credit. These schemes promise quick fixes but often leave you in worse financial shape. Protect yourself by choosing legitimate credit-building programs and avoiding deceptive shortcuts that can harm finances.

15. Overspending To Get Rewards Points

There’s no reason to overdo it with reward points, as overspending for points can strain your budget. The value of rewards shouldn’t trump responsible spending. Be mindful of your budget to ensure that chasing points doesn’t lead to unnecessary debt. It’s not that serious!

16. Casually Sharing Your Card Information

I don’t know who is just randomly discussing their card details with a stranger or even a friend. However, I can see people getting duped into sharing details online for sure. Sharing your card information casually is a security gamble. It exposes you to fraud and unauthorized transactions. Keep your card details confidential, sharing them only in secure, trusted transactions.

17. Disregarding Interest Rates

Try not to treat interest rates like something you just have to accept that doesn’t really matter. It’s your job to try to get the most favorable rates and to compare cards. You’ll end up paying more if you’re burdened with hefty rates. Be intentional, and be mindful of the interest attached to your credit card.

18. Ignoring Introductory APR Periods

Don’t hesitate to take advantage of introductory APR periods when searching for credit cards. That shouldn’t be the only thing determining which card you pick, but it’s a great opportunity to capitalize. These initial low or zero-interest periods can save you money. Be responsible with the offer; it’s not an invitation to max out the credit card, which is where a lot of folks go wrong. Also, keep track of when the introductory period expires to avoid unexpected and costly interest charges.

19. Making Impulse Buys

If you’re going somewhere that you shouldn’t be using your credit card, just leave it at home! Impulse buys are dangerous. You go back and forth with yourself as to why you don’t need the purchase, and then you ultimately decide to do it anyway. Or maybe you just walk into the store and swipe your card without flinching. Either way, you’ll regret it when it’s time to pay. Stick to a budget and spare yourself from unnecessary financial stress caused by impulsive spending.

20. Applying for Credit To Get Perks

Applying for credit to chase perks is a double-edged sword. Frequent applications can hurt your credit score, neutralizing the perks. Plus, shopping for a singular credit card without a strategy isn’t good either. It’s way too easy to fall into debt when you get a card. You need some type of plan on how you want to use it, how you’ll manage the payments, etc. If you applied for a card just because of a welcome bonus or travel points as an incentive, you may jeopardize the long-term impact on your credit.

21. Co-Signing for Someone Who Has Poor Credit

Co-signing for someone with poor credit? No, no, and no. It also doesn’t matter who the person is that’s asking. While helping them, it links your fate with theirs. Should they be unable to pay, the commitment becomes yours. If there’s literally any other way to help them, go for it. It’s so important to cautiously approach co-signing for individuals with poor credit. All things considered, this is almost never a good idea!

22. Not Understanding Card Fees

You’d be surprised how many people don’t understand or thoroughly review their card fees before they apply or even after approval. Annual fees, late payment charges, and other fees can add up. Educate yourself on your card’s fee structure, be aware of the costs, and make informed decisions to avoid unnecessary financial burdens.

23. Transferring Balances

While balance transfers can be helpful, the lack of a repayment strategy places you at risk of accumulating more debt. Don’t just apply for a credit card so you can put your debt somewhere else. Have a clear plan to pay off the transferred balance and avoid worsening your financial situation.

24. Using Your Credit Card for Medical Expenses

Using credit to cover medical costs is a last resort with potential long-term consequences. High-interest rates and debt can compound the stress of medical bills. Exploring alternative payment options or negotiating with healthcare providers before resorting to credit for medical costs is essential.