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Credit cards are a handy little piece of plastic that can serve as a great financial tool to keep right in your back pocket. Though useful, if not handled properly credit cards can quickly become a pain point in your financial life. Here are some of the most common credit card mistakes made that you can avoid in the future. 

1. Only Making the Minimum Payment

While you should always make at least the minimum payment on credit card expenses, continuing to only make the minimum payment over long periods of time can have negative consequences. If you don’t pay your bill in full, this can rack up unnecessary interest charges over time and even lead to future debt troubles. In fact, failing to pay your bill in full more often than not, can add months or even years to the time it takes to pay off your debt. 

2. Forgetting to Review Billing Statements Each Month

Forgetting to look over your billing statements might not seem like a huge mistake, but it’s one that if left unchecked can snowball into an expensive problem. It’s important to check for charges you haven’t made or at the very least, review your statement for potential errors. Your monthly billing statement is also a great place to check for new or changed information regarding your credit card terms. Though it may just seem like one more thing to do each month, taking proactive precautions by reviewing your billing statement can prove vital in protecting your financial security.  

3. Applying for Too Many Credit Cards

Every time you apply for a new credit card, a new inquiry then appears on your credit report. The more inquiries you have in a short period of time, the greater risk your behavior appears to future lenders. Instead, take your time and do some research in order to find the right card for you. For example, if you know you’re an avid traveler, choosing to open a card with great travel rewards or flight points can be a beneficial option for your lifestyle. Signing up for a credit card is a big financial commitment, so it’s important you do the research and be strategic with your applications and timing. 

4. Failing to Understand APR and Fees 

Let’s be honest, after signing up for a credit card are you thoroughly reading that long cardmember agreement? Probably not, but it’s important you read through and at least understand important account terms that can result in applicable fees, as understanding these will also help you manage your spending habits better. Here’s a quick rundown of important terms you’ll want to look out for. 

  • Annual Fee: A cost your credit card provider charges you once a year to allow you to keep that card account open. However not every credit card comes with this fee.
  • Purchase APR: The interest rate you’re charged on purchases when you have a balance on your credit card. 
  • Balance Transfer APR: The interest rate an issuer charges on debts moved to a credit card from another loan or credit card.
  • Late Pay Fees:  What you could be charged if you don’t pay the monthly minimum amount due on your credit card account on time.

5. Missed Payments

Missed and even late payments can seriously begin to harm your credit score. In fact, according to data conducted by Fico, missing a payment can drop your score by around 30 points. To avoid potential damage to your credit score, set up automatic payments or calendar and email reminders to ensure you never miss another payment. 

The more you learn and know about your credit card the easier it is to avoid these mistakes and build solid credit skills for the future.