The most common credit card mistakes include missing due dates, not choosing the right card, spending beyond your means and taking out cash advances. Credit cards can be tricky, and it’s common for people to make mistakes when using them. The key is to learn from these mistakes and avoid making them again. With that in mind, we’ve compiled a list of the most common credit card mistakes to help you learn from the missteps of others and find your way to sturdier financial footing.
Types of Credit Card Mistakes
Most Common Credit Card Mistakes
1. Not Paying Bills on Time
Paying late or missing payments altogether is one of the most problematic and easily correctable issues facing credit card users. Not paying on time leads to late fees, and you’ll start owing interest on both your balance and any new purchases that you make (given the loss of your grace period). If you’re late on a payment by more than 30 days, it’ll also get reported to the credit bureaus and cause credit score damage.
In order to avoid this costly mistake, all you need to do is set up automatic monthly payments from a bank account for at least the minimum amount due. This will take forgetfulness out of the equation, so you’ll always pay on time as long as you have enough money in your account. In addition, if you’re already late, paying your full statement balance for two consecutive billing periods can restore your grace period.
2. Carrying a Balance From Month to Month
For some reason, many people believe that carrying a small amount of debt garners the favor of their creditors because it allows these credit card companies to earn profits from interest. This is untrue, however, and carrying a monthly balance simply increases your costs.
When you don’t pay your full statement balance by your monthly due date, you’ll start to owe interest on your balance. It will accrue every day at your card’s regular APR. The average APR for new credit card offers in 2025 is 22.76%, which is quite expensive.
In addition, if you don’t pay in full, you’ll lose your grace period on new purchases and start owing interest on them right away too. On top of that, your increased balance from interest can hurt your credit score.
To avoid this credit card mistake, simply try your best to pay your statement balance in full every month by your due date. If that’s not possible, work to get debt-free as quickly as you can. The best way to accomplish this is by budgeting well and trying to only spend what you can afford to pay.
3. Spending More Than You Can Afford
If you spend more than you can afford to pay, you’ll end up in debt, paying high interest costs and damaging your credit standing. Sometimes, overspending is unavoidable if you have unexpected essential expenses like medical bills or car repairs, or you lose your job. But in many cases, people overspend by making luxury purchases that they can’t afford.
The solution to overspending is careful budgeting. If you have a clear idea of how much money you make each month and how much your essential expenses are, you’ll know how much room is left for discretionary spending. Then, all it takes is the discipline to stick to that budget.
When creating your budget, you should make room for emergency fund contributions. This can cushion the blow of sudden unexpected expenses and make it less likely that you’ll have to charge them to your credit card.
4. Maxing Out Your Credit Card
Just because you can use your entire credit limit, that doesn’t mean you should. Using more than 30% of your credit limit at a time can damage your credit score. That’s true for each card you have and all of your cards collectively.
Your credit utilization ratio is a big component in your credit score, but it only gets reported to the credit bureaus once a month when your billing period ends. So you can spend as much on your card as you like during the month and still avoid credit score damage by paying down your balance to below 30% of your credit limit before the end of your billing period.
Maxing out your card isn’t even the worst thing you can do, though. Some cards let you opt-in for the ability to exceed your credit limit. You should only use this feature in the case of a true emergency.
5. Applying for Too Many Credit Cards at Once
Each time you apply for a credit card, your credit score takes a slight hit, which you can usually bounce back from after six months of responsible credit use. This should not discourage you from opening a card if you need it. You just don’t want to go overboard – especially if you’re going to need a polished credit score in the near future, like if you’re about to apply for a mortgage or a car loan. Applying for multiple cards at once will cause a larger score drop than a single card application will.
All you need to do is wait half a year between credit card applications to allow your score to bounce back. Or, if you’re denied for a card and still really need one, make sure the second card you apply for is one with nearly guaranteed approval, like a secured card.
6. Closing Old Credit Card Accounts
Closing a credit card can hurt your credit score because it reduces the amount of available credit you have and can shorten the average age of your credit card accounts, both of which are two key components in your credit score. Whether you’ll see a score drop, and how much of a drop, depends on how old the account is and how big your credit limit is.
Generally, it’s best to avoid closing credit cards at all because they’ll continue building credit each month even if you don’t use them. You can even cut the physical card up to remove any temptation to spend. The only case where closing a card is better is if it has an annual fee. It’s not worth being charged money for something you don’t use.
7. Not Monitoring Transactions & Billing Statements
If you don’t keep an eye on the transactions that get made on your card, that leaves you vulnerable to mistakes and fraud. If a merchant charges you the wrong amount or double charges you, or someone gets a hold of your card information and makes unauthorized purchases, you might not even notice. Then, you could end up paying for charges you never were supposed to pay.
To avoid getting taken advantage of, you should at the very least look over your credit card bill each month. But it’s even better to monitor your account on a weekly or even daily basis through your online account so you can catch any suspicious transactions as soon as they appear. You can even use WalletHub Premium to sync your accounts with our “Spending Tracker” and budgeting tools, allowing you to get alerts when new purchases appear.
If you find any transactions that you don’t recognize, make sure to report and dispute them with your credit card company right away.
8. Choosing the Wrong Credit Card
While many people get distracted by rewards, rewards cards aren’t right for everybody. It’s important to pick a credit card that will work well with your lifestyle and help you achieve your financial priorities. So to begin, think about how you plan to use the card and how good your credit is:
- If you have credit card debt, get a credit card that has an intro 0% APR on balance transfers.
- If you’re planning a big ticket purchase, find a card offering an intro 0% APR on new purchases.
- If you have limited or bad credit, get a credit card that’s geared toward helping you build credit at the lowest possible cost.
- If you have above-average credit and you pay your bill in full each month, you can focus on earning rewards.
- If you want a rewards card but don’t travel a lot, get a solid cash back credit card with a rewards structure that suits your spending habits.
- If you fly at least 30,000 miles each year or spend at least 20 nights in hotels, consider getting a travel rewards credit card. This ensures that you will be able to efficiently accrue rewards as well as redeem frequently enough to avoid rewards devaluation.
You can learn more about choosing the right credit card here on WalletHub.
9. Not Knowing Your Card’s APR & Fees
Before you ever use your credit card, you should know what interest rates you’ll be charged for carrying a balance on purchases, balance transfers and cash advances. You should also know whether your card has an annual fee and a foreign transaction fee, and be aware of what fees it charges for balance transfers, cash advances, and late payments.
Being knowledgeable about your card’s interest rates and fees allows you to take steps to avoid them. You can avoid interest on purchases by paying your balance in full each and every month, but there are also steps you can take to ensure you’re getting the best possible interest rate. For example, you could apply for a 0% credit card or consolidate your debts.
You can avoid most credit card fees by choosing cards that don’t charge them or by avoiding the types of transactions that trigger them. However, keep in mind that annual fees are sometimes worth paying in order to get better rewards and supplemental benefits.
10. Not Checking Your Credit Score & Reports
Not knowing what your credit score is and what’s on your credit report leaves you unprepared to apply for a credit card, since you won’t have a good grasp of what cards you can qualify for. The good news is that you can check your credit score and view your TransUnion credit report for free here on WalletHub and get daily updates. You can view your other major credit reports for free weekly at AnnualCreditReport.com.
One of the biggest reasons to review your credit reports regularly is that credit bureaus are mistake-prone. According to the Federal Trade Commission, 1 in 5 people have a mistake on at least one of their three major credit reports. But the reality might be even worse than that – 44% of people found at least one issue when they checked their credit reports, according to a 2024 study conducted by Consumer Reports and WorkMoney.
That means you need to take advantage of your right to free credit reports and analyze your files for errors. You might find a mistake that is unfairly costing you money or preventing you from getting approved for a better credit card.
11. Taking Out a Cash Advance
Cash advances are costly, typically triggering a fee in excess of $10 – the average is currently 4.02%. You’ll also get hit with an interest rate that’s usually higher than your regular APR, and interest begins accruing immediately. The average cash advance APR is 24.83%, according to WalletHub’s Credit Card Landscape Report. Cash advances also tell your issuer that you are desperate for funds.
That’s why you should never do a cash advance. Instead, get either a debit card or a prepaid card that offers free or low-cost ATM withdrawals, and avoid situations that might require you to spend more than you have.
Credit Card Selection Mistakes
Not Having a Credit Card
Credit cards can lead to problems when misused, including credit score damage and unsustainable debt, but that is no reason to avoid them entirely. Credit cards are by far the most accessible and effective credit building tool available to consumers, since you don’t have to incur any debt or make any purchases in order to add positive information to your major credit reports. As a result, if you’re unsure about your ability to spend responsibly, just lock your card in a safe or even cut it up.
Opening a Credit Card When You Need a Good Credit Score
Since opening a credit card causes slight credit score damage, you should avoid doing so within six months of applying for a loan or buying a car.
Mistaking No Preset Spending Limit for a Limitless Credit Line
Many people think NPSL means that a card has no limit. However, all it really means is that a card’s spending limit is determined on a month-to-month basis and that the issuer will not inform you or the major credit bureaus of exactly what it is at any time. This creates the potential for your card to get unexpectedly declined and for your credit score to fall because of deceptively high credit utilization.
Thinking College Students Can’t Use Credit Cards
The CARD Act has confused a lot of people into thinking that most college-age consumers cannot use credit cards. They believe the law requires you to be at least 21 years old. That’s not the case, however, as you can get a credit card at 18 as long as you can prove you have enough independent income to cover a card’s monthly minimum payment. This gives college students and other young people the opportunity to start building credit early.
You can check out our editor’s picks for the best credit cards for college students and the best starter credit cards to see the top offers.
Credit Building Mistakes
Paying to “Repair” Your Credit
There really is no quick fix to credit building, no matter how much or whom you pay. The companies that advertise fee-based credit repair services are merely attempting to capitalize on financially desperate individuals and will do no more to improve your situation than you can do by yourself.
The best approach is to save your money, check your credit reports for errors, pay down debt and begin to funnel positive information into your major credit reports in order to devalue past mistakes over time.
Thinking You Must Make Purchases to Benefit
Credit scoring agencies value low credit utilization as well as consumers who do not spend beyond their means. Therefore, as long as you maintain a credit card at zero balance and in good standing, your credit score will benefit. That said, your score will improve faster if you use 1% to 10% of your credit limit each month and pay it off in full.
Using the Wrong Credit Building Credit Card
If improving your credit standing is your goal, you should focus on getting a credit card with the lowest fee structure possible, including no fees for account inactivity. This will prevent credit improvement from becoming a cost-intensive endeavor and will allow you to lock the card in a drawer if you so choose. Neither interest rates nor rewards should be a priority because rewards typically result in higher fees, and you should instead try to pay your balance in full each month.
Paying for Your Credit Score
There is no reason to pay a company for access to your credit score. For one thing, more and more financial services companies, including WalletHub and major credit card issuers, are offering free credit score access.
Plus, you don’t need to worry about your credit score as long as you have your credit report. We are all entitled to a free copy of our major credit reports on a weekly basis, and this will have all the information you need to determine where your credit stands. After all, credit scores are based on the information in credit reports.
Credit Card Fee Mistakes
Paying Foreign Transaction Fees
Credit card companies often charge fees of 1% -3% for each purchase you make from a merchant based in another country, whether in person, online or over the phone. While these fees can lead to high costs, you can avoid them if you have a no foreign transaction fee credit card.
Paying Too Much in Balance Transfer Fees
Consumers often become so enamored with 0% balance transfer offers they forget there’s often a fee associated with them. Both interest rates and balance transfer fees impact the financial benefit of a balance transfer, so you must consider them in combination.
Not Factoring Fees Into Potential Savings From Rewards
Many of the best rewards credit cards charge fees in order to pay for the value they provide to cardholders. Such cards can still wind up easily paying for their fees and much more, depending on your spending habits. Either way, paying this type of fee isn’t necessarily a good or bad idea; it all depends on what you’re getting for the money.
Opting in for Overlimit Fees
While over-limit fees were once typically $39 and a thorn in the side of consumers who didn’t keep a close eye on their credit utilization, the Credit Card Act of 2009 has virtually eliminated this type of fee from the market, according to a report by the Office of the Comptroller of the Currency.
Cardholders must now actively opt-in for the ability to spend beyond their credit line, and overlimit fees must be proportional to the amount by which the spending limit was exceeded. Still, incurring such fees is a mistake for the average consumer, except for in emergency situations, given the expense involved and the ease with which the situation can be avoided with a bit of planning.
Paying Late Fees
The average late fee is $33.78. Late fees are an unnecessary expense, considering you can avoid the fees by setting up automatic monthly payments for at least the minimum amount due. Late payments may also lead to credit score damage.
Credit Card Spending & Payment Mistakes
Paying Less Than the Minimum
Credit card companies make no distinction between payments below the minimum required and no payment at all, meaning a payment less than the minimum does not stop the advancement of delinquency. Therefore, if you don’t have enough to make a minimum payment, you should contact your credit card company and see if you can work out an alternate payment plan.
Failing to Pay Off Store Card Debt
Store cards often provide attractive deals and discounts, including 0% introductory APR offers. However, some of these offers come with a deferred interest clause that will retroactively apply interest to your entire original purchase amount if you are late or miss a payment.
Store credit card offers typically have high interest rates as well, with an average APR of 33.09% compared to the average APR of 22.76% for traditional credit card offers. So, if you carry a balance on a store card for too long, the savings it provided you will be effectively erased.
Having a High Credit Utilization Ratio
Credit scoring agencies use a balance-to-available-credit ratio called credit utilization as part of their credit score calculations. Therefore, spending most or all of your available credit will have a detrimental effect on your credit standing.
Credit Card Debt Mistakes
Assuming Balance Transfers Are Just for Credit Card Debt
In theory, you can transfer any type of debt to a balance transfer credit card, if your credit card company allows it. That doesn’t mean you should transfer your student loan balance or mortgage, but it could help you save on the remnants of your auto loan or get rid of a payday loan.
Failing to Account for Payment Allocation
If you carry multiple balances on a single credit card (e.g. you made a balance transfer) only the amount of your payment above the required minimum will be applied to the balance with the highest interest rate. So, in order to minimize your interest costs, you should try to pay as much as possible above the minimum each month until the balance with the highest interest rate is paid down.
Ignoring Your Problems
Most credit problems (e.g. debt, delinquency, etc.) get worse when left alone, so it’s in your best interest to directly address any such problems as quickly as possible.
Not Knowing Your State’s Statute of Limitations for Debt
The statute of limitations for credit card debt is the time during which debt is relevant under the law. Once it expires, any lawsuit brought to recoup money that you owe will be dismissed, as long as you make it clear to the court that this debt is “time barred.” However, making payments or even acknowledging that you owe the debt resets the clock for the statute of limitations.
Identity Theft & Fraud Mistakes
Using a Debit Card for Increased Fraud Protection
Some folks mistakenly believe that debit cards protect them from fraud better than credit cards. However, all credit card transactions are covered by $0 fraud liability guarantees, while only signature debit transactions are guaranteed of that.
In addition, credit cards make fraud easier to deal with since you don’t have to actually pay out of pocket for purchases until the end of the month. With debit cards, funds are withdrawn from your bank account immediately.
Not Filling Out the Tip Field on Receipts
You can file this one under “leave no room for doubt.” Basically, you want to fill in the tip field on a receipt – even if it entails just writing $0 – because this will make it harder for someone at the restaurant to inflate your total in order to pocket some extra cash.
Sending Credit Card Info Via Email
You never want to transmit sensitive financial information over unsecure online channels. This includes entering payment information into non-https websites and relaying account details via email or text message. Such practices leave you susceptible to the information being stolen, and the resulting inconvenience.
Not Taking Other Common Sense Steps to Safeguard Your Finances
Shredding financial documents, regularly reviewing account statements, locking your mailbox when on vacation, and changing your account passwords are all examples of easy steps that you can take to better protect your financial life.
Business Credit Card Mistakes
Assuming Business Isn’t Personal
Many small business owners assume that business-branded credit cards protect them from personal liability for unpaid debts. That is not the case, as all of the major card issuers require a “personal guarantee” and hold small business owners personally liable. That’s why they ask for your Social Security number when you apply.
Overestimating the Importance of Your Company’s Credit Standing
Since you’re held personally liable for a business credit card, the particular card you qualify for depends more on your personal credit standing than that of your business.
Carrying Debt on a Business Credit Card
Business credit cards are not covered by the CARD Act provision that makes it illegal for credit card companies to apply increased interest rates to existing balances. Therefore, holding debt on a business credit card is risky and can result in suddenly increased costs as a result of a credit card company raising its interest rates in order to quickly increase profits.
Not Using a Business Rewards Card
Although business credit cards usually aren’t great for long-term financing unless you have a 0% introductory APR, they are useful for everyday spending. Not only do they often provide lucrative rewards in business-specific expense categories, such as office supplies and telecommunications services, but they also offer extremely helpful expense tracking features as well as the ability to set custom spending limits for employees and then earn rewards on their transactions.
Using a business rewards credit card is therefore a must for transactions that small business owners can pay for in full within the month.
Failing to Reimburse Your Business for Personal Spending
If you ever use one of your business credit cards for personal reasons, make sure to repay the company for your spending. Otherwise, you’re playing with ethical fire and creating some potential tax problems, since a company bank account is likely paying the bill.
International Credit Card Usage Mistakes
Converting Hard Currency
Converting hard currency at a local bank or an airport Travelex location is a bad deal. Visa and Mastercard actually offer the best exchange rates, and you can save more than 8% by just buying things with a no foreign transaction fee credit card while abroad. Also taking a debit card that charges low international ATM withdrawal fees will also enable you to access local cash as needed while still saving on currency conversion.
Falling for Merchant Tricks
Foreign merchants often offer to covert purchase totals into U.S. dollars, allegedly for convenience sake. However, they typically charge inflated conversion rates for the service, so make sure to only sign checks and receipts denominated in the local currency.
Bottom Line
Now that you know how many different types of credit card mistakes people fall prey to, it may seem overwhelming. However, avoiding most credit card mistakes boils down to the following fundamental principles:
- Choose the right cards
- Know the terms of your accounts
- Monitor your transactions and credit reports
- Avoid overspending
- Pay your bills on time
- Stay vigilant against fraud
Focusing on those key areas and following the advice in this guide for avoiding individual mistakes can ensure that you use your card responsibly, raise your credit score, and save money.
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