Credit cards can prove invaluable when it comes to emergency funding. They are used by millions of Americans and are fairly easy to obtain. However, as useful as they can be, they can also potentially get you into further financial difficulties. This is especially true if you don’t use them correctly.

Below, you’ll find some of the top credit card mistakes you’re probably making right now and how they can be avoided.

Paying Back the Minimum Each Month

One of the great things about credit cards is that you have the option to pay back the minimum each month. This is often an affordable payment that can be easy to manage. However, you shouldn’t be paying just the minimum every month.

The trouble with only paying the minimum amount every month, is that you’ll often only be paying the interest. This means the balance will either never go down, or it will go down extremely slowly. So, whenever you can it’s better to pay more than the minimum payment each month.

Making Late Payments

If you miss payments on your credit card, it can have a significantly negative impact on your credit rating. You’ll also be hit with late payment fees which can get you into further financial difficulties.

To avoid making late payments, ensure you have enough to cover at least the minimum payment amount. You should also open all of your credit statements, so you know when the payment is due.

Not Understanding the Fees Involved

A lot of people have no idea about the fees associated with their credit card. Some charge a monthly fee just for being able to use them, while others charge high fees for cash advances.

Ideally, you’ll look at the fees before you take out a credit card. You’ll find them in the small print before you agree to accept a card. If you find you’re paying a lot in hidden fees and charges, consider switching to a lower-cost card.

Maxing Out Your Spending Limit

It’s a common misconception that keeping a balance on your card will improve your credit rating. The truth is, the more credit you are utilizing, the worse it’s going to affect your credit rating. This means that if you’re maxing out your spending limit, it’s going to be having a negative impact on your finances.

Try to utilize just a small portion of your credit card balance to avoid this becoming a problem.

Using Too Many Credit Cards

Finally, problems can arise when you’re using too many credit cards. Initially, it can be reassuring knowing you have multiple lines of credit you can turn to if needed. However, if you use more than one credit card, your spending can easily spiral out of control. It can be difficult keeping up with multiple card payments too, so always try to just use one card whenever possible.

Credit cards can be extremely useful if they are used correctly. Be sure to avoid the common mistakes above if you don’t want to get into unmanageable debt.


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