4 Credit Card Mistakes You'll Wish You Hadn't Made
by Christy Bieber | Jan. 16, 2021
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You'll come to regret these big errors if you make them.
When you use your credit cards wisely, they can be a great financial tool. You can enjoy the rewards you'll reap from everyday spending and get to build your credit score. But if you don't make the right moves with your cards, you could end up in financial trouble that leaves you wishing you'd made different decisions.
You don't want to spend years lamenting your credit card choices, so be certain to avoid these four big mistakes you're sure to regret.
1. Getting the wrong credit card
The right credit card for you depends on your situation. If you carry a balance, the best card is one with the lowest possible interest rate. If you're trying to pay down debt, a balance transfer card with an introductory 0% promotional rate on transferred debt could be the right choice. If you pay off your card in full every month, the best card for you is the one that rewards the spending you do the most.
Unfortunately, many people don't do the research to find the card best suited to them. This could end up being a costly mistake that leads you to miss out on hundreds of dollars of rewards or pay hundreds or even thousands of dollars in extra interest.
Getting the wrong credit card is also a really easy mistake to avoid. Each year, take the time to review your credit card options, think about how you'll use your card, and assess your spending patterns. Then decide if the card you're currently carrying is the right fit or if it's time to make a change.
2. Charging more than you can afford to pay off
When you're swiping your credit card, it's easy to forget that the bill is going to come due at the end of the month. Unfortunately, this could lead to charging more than you can pay off when your statement arrives.
This is a major mistake you'll definitely wish you hadn't made. As soon as you carry a balance, you'll start to owe interest that makes your past purchases costlier. Since you'll have to devote income in the future to paying off your card, it will become harder to live within your means. And it'll be more likely you'll grow your debt balance rather than pay it down.
To avoid this situation, you should ideally live on a budget and charge only what you've determined you can afford to spend. If doing that is difficult, at least check your card balance regularly to make sure you're not spending more than you can comfortably afford to pay back.
3. Paying only the minimum
Credit card companies set minimum payments that are very low relative to the total you owe. If you pay only the minimum amount due, you're going to end up in debt for many years. And you'll likely end up paying more in interest than your purchases cost in the first place.
The best option is to pay the full balance on your credit card each month. If that's not always possible, make the largest possible monthly payment you can afford. And if you can't afford to pay more than the minimum, it's a good idea to rework your budget to free up some extra cash or look for ways to increase your income to pay down your debt faster.
4. Making the wrong person an authorized user
As a credit card holder, you're allowed to name other people as authorized users on your card. This gives them access to your credit card, and it means your card shows up on their credit history (which can help them build credit).
When you make someone an authorized user, they aren't legally responsible for the charges they make on your credit card -- you are. If they decide to run up a big bill and not pay it, you're going to be the one stuck covering the cost.
If you're tempted to name a romantic partner, friend, child, or anyone else in your life as an authorized user, make certain you're completely comfortable with their spending habits. Otherwise, this could be a decision that leaves you with major regrets.
Now that you know about these four big mistakes, you can take steps to avoid them. By researching your card options, only charging what you can afford, paying more than the minimum every month, and not giving access to your card to anyone you don't completely trust, you can set yourself up to be very happy with the benefits that come from card use. And you won't be left with regrets.
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About the Author
Christy Bieber is a personal finance and legal writer with more than a decade of experience. Her work has been featured on major outlets including MSN Money, CNBC, and USA Today.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
