5 credit card mistakes most people make

Person with credit card
Read these tips: your credit is at stake. Credit: Lightwavemedia/Thinkstock

Most people are familiar with how credit cards work, but because myths and misinformation have made our knowledge of them a little muddy, there are several common mistakes most credit card holders don’t even know they are making. Here are the top five:

Only paying the minimum payment
This seems like the easiest way to make a payment on a credit card, but there are some major drawbacks to only paying the minimum payment. The biggest drawback is that you’re paying more money overtime in interest. Paying an additional $15 to $20 each month may not seem like it’ll make a huge difference, but that additional money begins to add up and soon you are paying hundreds of dollars in interest.

An additional drawback to only paying the minimum balance is that it may impact your creditworthiness. If you aren’t paying your balance off completely each month, lenders might think that you’ve taken on more debt than you can handle.

Closing old credit cards
Most think that once they pay off a credit card, it’s in their best interest to close the card so they don’t have the temptation to build up a balance again. Even though it seems like a good idea to remove the temptation, closing the card can impact your credit utilization ratio, which can negatively impact your credit scores.

Maxing out credit cards
Even though there are circumstances when you may need to use most or all of your available credit, it’s best if you pay down the balance as quickly as you can. If you don’t, it can have a negative impact on your credit scores. Similar to closing old credit cards, maxing out your credit cards or carrying a hefty balance raises your credit utilization ratio.

Applying for multiple credit cards at once
Opening new credit cards is one way to positively impact your credit scores because it adds to your total available credit, which lowers your credit utilization score. That being said, applying for multiple credit cards at once may have the reverse effect on your credit scores. Too many hard inquiries on your credit report can negatively impact your scores, which will make you seem desperate for more credit. It’s best to apply to a credit card that you know you’ll get approved for.

Ignoring monthly credit card statements
It’s essential that you open your statements and thoroughly look through them before you throw them out. Verify that you completed each of the transactions yourself and report any unknown transactions to your bank as possible fraud. This is an important habit to get used to, especially with all of the store data breaches that have occurred since the end of 2013, including the Target breach that exposed 110 million of its customers. By simply checking your statements each month, you can know if you fell victim to a possible security breach and even catch fraudulent transactions before it’s too late.

Julie Myhre is an editor at Next Advisor. A longer version of this article originally appeared on Next Advisor.

Metro does not endorse the opinions of this author.



News
Entertainment
Sports
Lifestyle
Local

MTA announces service changes for Sunday

The MTA has announced service changes ahead of Sunday's People's Climate March, which will be held from 11:30 a.m. to 4:30 p.m. Sunday. Riders using…

Local

NYPD launches Twitter account for L train

The NYPD recently launched a Twitter handle dedicated to the L train and its riders. According to @NYPDLtrain, officers went underground Thursday morning to hand…

Local

Bushwick community space offers activists a place to…

A new Bushwick community space offers community activists to meet, create, learn and throw back a few cold ones. MayDay, located 214 Starr Street in Bushwick,…

Local

Activists gearing up for Sunday's "historic" People's Climate…

If all goes according to plan, more than 100,000 people will gather near Central Park West on Sunday morning and march through midtown to raise…

Movies

Review: Terry Gilliam's 'The Zero Theorem' is better…

Terry Gilliam's latest, "The Zero Theorem," concerns a reclusive malcontent (Christoph Waltz) struggling with the search for the meaning of life.

Music

Esperanza Spalding and a being called Emily get…

Esperanza Spalding is about to spiral off in a brand new direction that may or may include an alter ego named Emily.

Movies

Review: Bickering family dramedy 'This is Where I…

A talented cast sits Shiva in the bickering family dramedy "This is Where I Leave You," although it's more sap than yuks.

Movies

Review: Desert-walking movie 'Tracks' would be better as…

Mia Wasikowska walks 1700 miles across Australia's deserts in "Tracks," in a story that defies triumph-of-the-spirit cliches but gets some of them anyway.

NFL

J.J. Watt poses unique challenges to struggling Giants…

Watt, arguably the best defensive player in the league, is the leader of a surprising Texans (2-0) team that has already matched last season’s win total.

NFL

Eric Decker 'unlikely to play' against Bears: Source

Jets wide receiver Eric Decker's status for Monday night’s game against the Bears is in doubt after he missed practice again Wednesday.

NFL

Preston Parker, not Odell Beckham, will replace Jerrel…

Tom Coughlin noted the next man up will be unheralded veteran Preston Parker.

NFL

NFL Week 3 full schedule (kickoff time, TV)

NFL Week 3 full schedule (kickoff time, TV)

Parenting

A sneaky way to serve kids fruits and…

"My First Juices and Smoothies" gives smoothie recipes for kids.

Style

3 things we love from Day 1 of…

The highlights from Day 1 of Milan Fashion Week.

Sex

Why don't more couples use condoms?

  Call it the “condom moment.” That’s the name the authors of a new study have given to the pivotal conversation every couple should be…

Sex

Need an idea for a first date? Here's…

Picture your idea of a nice first date. Is it dinner and a movie? A visit to an interesting museum exhibit? Instead, an expert on…