Credit cards can be good alternatives to carrying cash. Moreover, they have better benefits than debit cards, such as travel points and other perks. However, the benefits and convenience mainly depend on how one uses their credit cards. There are certain blunders that can undo all the advantages one has gained. From exceeding the spending limits to incurring additional charges, there are several mistakes to avoid when using credit cards. Here are some of the common ones.

Making frequent late payments
Missing a payment is one of the major mistakes that many end up committing while using credit cards. It can easily damage one’s credit score. This is because payment history is one of the most significant factors of credit rating. Nearly 30% of one’s overall score depends on how efficiently one can pay their credit card bill on time. To avoid this, set monthly reminders.

Paying only the minimum balance
Paying only the minimum balance on the credit card bill is a feasible solution. But it should be done less frequently, specifically when one doesn’t have enough money to pay off the entire bill. However, getting in the habit of paying only the minimum balance every month means one is carrying their credit card debt from one month to the next. Moreover, the interest will continue to increase.

Maxing out on the credit limit
Hitting the credit limit can lead to higher interest rates and affect the credit utilization ratio. This ratio is a significant factor in determining a person’s credit score. It is calculated by dividing the amount owed by the total credit limit, and it’s recommended to keep it below 30% for a better credit score. To achieve this, it’s advisable not to exceed more than 10% of the credit limit when spending.

Chasing rewards without considering spending habits
With credit card companies offering a plethora of perks and rewards, it can be tempting to sign up for multiple credit cards or for one that offers the maximum benefits. However, this might not work well. This is because if one is spending a lot on grocery shopping and the credit card has more rewards for traveling and eating out, it will not be of much use. So, it is important to get a card that offers rewards for things one tends to spend more money on.