Here's the Worst Credit Card Advice We Found on Reddit

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  • Reddit users often have internalized myths or just bad advice about credit cards, and when they post about them, they usually get back useful advice instead.
  • It's a bad idea to take out cash advances or close credit card accounts if you can avoid it.
  • If you're just getting started with credit, you will likely have an easier time getting a secured credit card than an unsecured one.

Reddit users quickly clear up misconceptions and falsehoods.

Reddit is a fascinating place on the internet to get lost in. There are so many subreddits (individual forums) on any topic you can imagine. Naturally, this extends to money topics. r/CreditCards is full of Reddit users with tons of credit card experience, and if you're new to credit cards, it can be a great place to get tips and tricks -- as well as a lot of dos and don'ts.

I dug into r/CreditCards and found some examples of credit card don'ts that Reddit users posed as questions in the forum. Other users were quick to offer the correct advice, and I will discuss it here as well. Read on for credit card pitfalls and how to avoid them.

'I'm going to take out a cash advance to invest.'

One Reddit user was specifically seeking out a credit card that would allow them to take out $10,000 in the form of a cash advance so they could use that money to invest in I bonds. While I bonds can be a good investment (and especially this year, with inflation being high), it's not a good move to finance this investment with a cash advance. High on the list of things you really don't want to do with a credit card is taking out a cash advance.

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While this doesn't seem consequential (after all, you're just using your credit card like a debit card to withdraw money from an ATM), it can have big implications for your finances. Your credit card issuer will start charging you interest on a cash advance immediately, and usually at a higher percentage rate than your purchase APR. You'll also be charged a cash advance fee, often in the amount of 3% to 5% of the advance amount. So even if a credit card offered a $10,000 cash advance, there'd be a fee of $300-$500 immediately. Finally, you won't earn rewards or cash back on a cash advance.

It's best to avoid cash advances, unless you have a serious need for a small amount of money and would be in a pinch without it (or would have to resort to taking out a payday loan, which is another bad idea).

'I want my first credit card to be this particular one.'

Another Reddit user asked for help in obtaining their first credit card at age 18. They did some research and identified a few cards to apply for and ultimately didn't get approved. While researching credit cards ahead of applying for them and trying to find the right fit for you and your finances is a great money move, when you're first getting started as an adult, this may not work out for you.

Other Reddit users made suggestions, such as applying for a student credit card, or trying for a card with certain issuers who are known to be friendlier to young people just getting started with credit. Others recommended a free credit-monitoring service to help the poster get a handle on checking their credit reports, and some also suggested starting with a secured credit card.

Secured credit cards are a great way for students to get started with using credit. Your card's limit will be the amount of the deposit you make to the issuer, and as you spend that money and repay the card (ideally, in full and on time) every month, you're building credit, and may eventually be able to graduate to an unsecured credit card. If you're just starting with credit, don't assume you'll qualify for the card you have your heart set on. Start small and build up your credit.

'I got the wrong card and want to cancel it.'

Finally, one Reddit user acknowledged they had accidentally ended up with the wrong credit card. They had been trying to keep cards with just one issuer, and already knew the rules for that issuer regarding transferring cash back into travel points. Unfortunately, their new credit card was with a different company that has different rules. The poster wondered how to cancel this new card, or even if it was a good idea. Other users stepped up to note that canceling the new card wasn't a good idea, for a few reasons.

Opening a new credit card and abruptly canceling it soon after will likely raise red flags with a credit card company, as they are often attuned to possibly fraudulent behavior. And if the Reddit poster wanted to open a different card with that issuer, they may have trouble getting approved. Plus, closing a credit card account is often detrimental to your credit score, as you're both reducing the average age of your accounts (granted, in this case the account was brand new) and your available credit limit.

Instead, it may be a better idea for the Reddit user to keep the card account and use it for a small purchase or bill payment every few months so that the card history and available credit limit continue to give their credit score a boost. If the card was one with an annual fee, they could contact the issuer and see about the possibility of downgrading to a no annual fee card so they don't end up needlessly paying for a card they don't plan to use often.

There are an awful lot of potential pitfalls with using credit cards. Thankfully, Reddit is here to clear up any misconceptions about them that users may hold. Where else can you ask a question or state a claim and immediately get help from anywhere in the world?

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