7 serious credit card mistakes you could be making without even realizing

Money is tricky, but there are a ton of things we can be doing to maximize what we make and spend efficiently. And it turns out there are a ton of common and avoidable credit card mistakes that many of us make without even realizing it.

But don’t feel bad about it! Money management is complicated (just consider the fine print in a single credit card application. Might as well be written in Klingon, areweright?). It’s why there’s a plethora of books written on the subject of managing debt, or avoiding it all together.

If reading a whole book about how to manage your credit sounds majorly overwhelming, we’ve got you covered. We’ve summarized some common mistakes for you, and put them into super user-friendly terms.

Because knowledge is power — especially when it comes to your credit cards!

1 Only paying the minimums

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According to a 2016 report by the FINRA Investor Education Foundation, 32 percent of consumers are still just paying the minimum amount due on credit cards. That means you’re carrying a balance every month. And that means you’re going to wind up paying a lot more over time, as interest accrues. Pay off your balance as soon as you can, so that you don’t keep giving your money away to the credit card companies.

2 Paying late

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Paying late can incur fees, which get added to your balance, which increases the interest you pay. It can also negatively affect your credit score. According to FICO, a 30-day delinquency could cause as much as a 90- to 110-point drop on a FICO Score of 780 for someone who has never missed a payment on any credit account. Just don’t do it!

3 Ignoring your billing statement

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Don’t toss that envelope into the “causes-anxiety-do-not-open” pile. You think you have anxiety at the mere receipt of the mail, but just wait until you realize, too late, that you missed a payment. Or, Goddess forbid, you learn someone’s been using your card fraudulently.

4 Maxing Out

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Sounds retro-cool. It’s not. By reaching your credit limit, you’re putting yourself at risk for over-the-limit fees and penalty interest rates. Usually, going over your limit by 30% damages your credit score. Live within your means and maintain a good credit card balance. Your future self will thank you.

5 Not knowing your terms

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You need to know how your credit card company handles late payments, so that you can know why to avoid doing it. You also need to know your APR (aka, your annual interest rate), so that you know how much you’ll wind up paying on purchases if you don’t pay your balance in full each month. Arm yourself with information to give yourself more control over your credit card costs. Review the terms of your credit card frequently. And open and read every piece of mail you get from them.

6 Closing your credit card (without appropriate research)

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Canceling your credit card account can hurt your credit score. Some circumstances may warrant a card closure, like if your card’s terms are no longer favorable and costing you too much money in the long run. While having less available credit won’t help your score, neither will constantly making late or minimum-only payments. But, if you think you can pay off a credit card balance, do that. You’ll build your credit score, and eventually, you’ll be debt-free.

7 Getting too many

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We get it. Those application invitations, promising free flights or retail points, are so enticing. But every credit card application has the potential to knock points off your credit score. Apply for new credit cards one at a time on an as-needed basis.

So there you have it — the credit card basics! And remember — it’s always a good idea to take a few hours out of your weekend every now and then to make sure you fully understand everything about your credit terms. You’ll thank yourself in the long-run!