9 December 7 MINS READ
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A credit card can be a blessing in disguise since it offers numerous perks and benefits. They're fantastic if you need to make purchases when you're in a pinch because they're such a terrific alternative to cash. However, if you use it incorrectly, it can cost you a lot of money, especially if you're already in debt or don't know how to manage your money.

In this article, Black Insure breaks down the 9 worst credit card mistakes you could be making, which can lead to financial catastrophe, and how to stay away from them.

Can we get started?


1. Making Minimum Payments

Credit card companies make it simple to pay down your balance by allowing you to make minimum payments. So, when you're in a tight financial situation, it's tempting to send the minimum monthly payments. However, you should resist the temptation. Making minimum payments on your credit card lengthens the time it takes to pay off your balance by raising the amount of interest you pay.

As such, while you should always make at least the minimum payments, we recommend you do more. Even if you're paying on time, send the biggest amount you can afford and cut back on other expenses so you can focus on paying off your debt. Pay attention to correcting this credit card mistake, and you'll be entirely ahead of your monthly cost in no time.

2. Missing A Payment/Paying Late

One of the worst credit card mistakes you can make is missing a payment or making a late payment. If you're more than 30 days late on a payment, it can drastically harm your credit score. According to FICO data, a 30-day missing payment will result in a drop of 17 to 83 points, and a 90-day missed payment will result in a drop of 27 to 133 points. Your account could be thrown into default, or you could face late payment fees or a higher penalty interest rate if you don't pay on time. You won't see a decline in your credit score if your payment is less than 30 days late since payment must be 30 days past due before it is reported to the credit agencies (Experian, Equifax, and TransUnion). However, you may be charged a late fee or penalty interest rate.

So, how do you resolve this? Simple. Don't forget about your deadline. Your credit cards usually have a consistent due date each month and it rarely varies. As a result, knowing the day your bill is due is critical. If you're having difficulties remembering when your payment is due, set a reminder on your phone or computer, or circle the dates on an easily accessible calendar. You can also set up autopay to ensure that your payments are made on time every time. We recommend this step even better, but if autopay isn't for you, you can remain with the first. Just make sure you have a strategy in place to keep track of your due dates.

3. Ignoring Your Billing Statement

Some people become so stressed or embarrassed by credit card debt that they refuse to examine their bills and act as if nothing is wrong. You shouldn’t. It's important to double-check that the transactions shown on your bill are correct so you can catch scammers or report problems early. You also run the danger of missing your payment deadline or underpaying. Not to mention the vital information about changes to your credit card terms you’d miss if you ignore your credit card statement.

At the absolute least, check your monthly statement for problems and confirm that all charges are valid and that payments have been made appropriately to your account. It's even better to go over your transactions a few times a week to remain on top of things and make sure everything is in order.

Always read the fine print on your bill!

4. Taking Out A Cash Advance

It could be okay to take out a cash advance when you are in a pinch. However, adopting this as a regular source of income will cost you a lot of money. Taking out a cash advance is one of the worst mistakes you can make with your credit card. Not only will you be charged a cash advance fee, which may be as high as 4% or even 5%, interest will also begin accruing on the cash you take out immediately. What’s more, you get no grace period like there is with regular purchases. To make matters worse, the credit card issuer may not consider the cash advance paid off until the debt on your previous purchases has been zeroed out.

There’s this thing credit card issuers do that you should be mindful of. They utilize strategies like sending checks in the mail to encourage you to use them to pay bills or treat yourself, but they rarely make it clear that these checks are treated the same as cash advances.

The best thing you can do with these checks is to shred them as soon as you get them to minimize temptation and stop would-be identity thieves from stealing your account data from the garbage. Many companies send you a personal identification number (PIN) shortly after you sign

up for a card in the hopes that you would use it to withdraw cash from an ATM. Also, shred that paper. Instead, use your credit card for purchases that have a reduced APR and a grace period before you must begin paying interest.

5. Not Understanding Your Credit Card Terms

When you apply for a credit card and get authorized, you normally receive a lengthy cardmember agreement that is unlikely to be on your must-read list. However, it's critical that you decipher the language and check crucial account terms to ensure that you're aware of all applicable fees.

Understanding credit card terms like your APR (annual percentage rate), introductory rates, and balance transfer fees are important so you know what to expect beyond the card's main selling points. Many credit cards come with introductory 0 percent APR offers, for example, where you won’t be charged interest on new purchases, balance transfers, or both, for a set time frame. These offers can be a great way to pay for expenses. However, you should read the fine print to understand when the introductory 0% APR period begins and ends, as well as the terms once the offer has ended. This will give you a better understanding of what the credit card company expects of you and will also help you better manage your spending habits. You'll be more likely to pay your credit card account on time if you know how your credit card provider handles late payments.

At least once or twice a year, review the terms of your credit card. You can get them via your credit card company's website or by contacting customer support.

6. Maxing Out Your Credit Card

It's never a smart idea to use the bulk, or all, of your available credit.

Your credit utilization ratio which is the percentage of your balance compared to your total credit limit is factored into your credit score. If you don't have enough money to make payments, don't use your credit card and don't use it to its limit. When you get near to your credit limit, you risk incurring over-the-limit fees and a penalty interest rate from your credit card company. You should aim for a utilization rate of approximately 30% because the higher it is, the more lenders will think you're a high-risk borrower.

Maintain a solid credit card balance to keep your credit score strong and your payments manageable. If you consistently charge close to your credit limit each month and have no trouble paying your account, you should contact your credit card issuer and request a credit increase.

7. Applying For Too Many Credit Cards

Each credit card application has the potential to lower your credit score by a few points. How? We'll tell you. A fresh inquiry appears on your credit record every time you apply for credit. The bigger the number of inquiries you receive in a short period of time, the riskier you appear to lenders. They get wary about the unexpected influx of credit card applications and begin to speculate. What's the point of having so many? Is it due to a financial problem? Your lenders will only perceive red flags.

So, apply for new credit cards one at a time. Additionally, if you want many credit cards, make sure you plan ahead. Spread your applications out across 90 days to six months, and only apply to the ones you truly want. You should also use pre-qualification forms, which allow you to see if you qualify for a card without affecting your credit score.

8. Closing A Credit Card

Though closing a credit card you don't use may seem like a smart idea, doing so may increase your credit utilization. And increasing your credit utilization will almost always cost you credit score points.

One component that goes into determining your credit score is the average length of time you've had credit. The average duration of your credit history is affected when you close a credit card. Because lenders look at the length of your credit accounts, canceling your oldest credit card could have a negative influence on your credit history.

Keep credit card accounts open until you're certain that canceling them won't harm your credit. There are situations, though, when closing a credit card makes sense, such as when you're charged an annual fee that isn't justified by the card's features.

9. Using a Credit Card for Day-to-Day Purchases

Another common mistake you are probably making is utilizing your credit cards for routine transactions. There's no reason to pay interest on essential products that you should buy with cash, cheque, or debit card with your monthly income. Charging non-discretionary expenses on a credit card might be risky unless you stick to a monthly budget and can pay off your credit card amount in full each month.

You'll take a big step toward bringing your spending under control if you keep typical purchases like groceries and utility bills off your credit card balance.


When you overcome debt and learn to use credit cards wisely and responsibly, they become useful and convenient financial instruments. Now that you know what not to do with a credit

card, you can hopefully avoid making the 9 worst credit card mistakes mentioned in this article and get on the right path.

Compare offers before choosing because one other bad credit card mistake you can make is not comparing credit card offers. Don't we all want the best fit for our individual circumstances? You shouldn’t select the wrong credit card. Now is the best time to shop around.