Common credit card mistakes

Credit cards are an essential part of the modern wallet or purse, not only for the convenience of credit, but also for the opportunity to improve your credit score. But there are pitfalls …

So, do you make any of these nine common credit card mistakes?

1.Know your credit score

It’s important to get familiar with your credit score, as it can save you from being rejected when applying for a loan or another credit card, as well as inspire you to improve your credit rating, should it be below par. To find out more about your credit rating, or to obtain a credit report, go to

2. Shop around

Consumers looking for a credit card that best suits them should first consider their credit rating, their lifestyle and how they spend money before applying. If you plan to carry a balance, then a low interest credit card would be ideal. If you’re a frequent flyer, then it may pay to go for a card with travel rewards. People applying for the wrong type of card can often be rejected or will have to cancel it down the track – both are situations that can have a negative effect on your credit rating.

3. Use your credit cards

Some people will have credit cards but not use them for fear of racking up debt that they may not be able to pay. By not using credit cards, you lose the opportunity to improve your credit rating, which may make borrowing for bigger purchases in the future a little more difficult.

4. Don’t collect credit cards

It goes without saying, although still important to mention, that having a whole lot of credit available to you and accessing it without carefully monitoring your spending, can often lead to crippling debt down the line. That’s why it’s best to only keep a couple of credit cards – a primary card for spending and one for back up and emergencies. It also pays to use the back up card once a month, then pay off the balance in full, to maintain a good credit rating.

5. Make timely payments

Missing the monthly due date may not seem like much of an issue, but each time you do so it damages your credit score. A well-planned budget should include credit card repayments and, if you’re likely to forget your regular monthly payment, then it may be best for you to set up a direct debit which pays at least the minimum payment or double the minimum monthly or, if you can afford it, the full balance each month.

6. Get rid of the balance

It’s not uncommon for people to think that just paying off the minimum amount each month helps their credit rating. But that’s not the case. Paying off the balance, instead of carrying it, should always be your priority if you truly wish to have a good credit score.

7. Don’t use your credit card for cash advances

Making cash withdrawals from your credit card account is always coupled with high interest rates that begin to accrue immediately upon withdrawal. So, if you want to make a cash withdrawal, it’s best to stick to your debit card or bank card.

8. Try not to cancel your cards

Some people are under the impression that, once they pay off a card that is no longer ‘useful’, it’s best to cancel it. But, once again, that’s not the case. It’s best to have a card that you use sparingly, rather than cancelling it altogether. Instead of cancelling what you feel is a useless card, stash it away somewhere and only pull it for a purchase out once every few months and, once again, pay the balance in full. That way you show that you can access the credit for purchase and that you are good for paying it off, building a good credit relationship with your provider.

9. Stay in the game

If you have a bad credit rating, or have suffered damage to your credit score, it’s easy to fall into the trap of thinking you can’t dig out of your debt hole. But when it comes to credit ratings, time heals all wounds. So, instead of cancelling your cards or, worse case scenario, declaring bankruptcy, talk to your provider and get some financial advice that can help you out of your debt dilemma. Banks often provide free credit consultations, or you could seek the advice of a trusted financial planner to see what is the most effective way to repair your credit.

Do you have any credit card advice for our members? Have you experienced any of these credit issues? What you do to remedy your situation?


Worried about the overall state of your financies? Then why not read more about the ‘Money habits you need to break‘? 

Written by Leon Della Bosca

Leon Della Bosca has worked in publishing and media in one form or another for around 25 years. He's a voracious reader, word spinner and art, writing, design, painting, drawing, travel and photography enthusiast. You'll often find him roaming through galleries or exploring the streets of his beloved Melbourne and surrounding suburbs, sketchpad or notebook in hand, smiling.