Don't Break the Bank: 5 Critical Credit Card Mistakes to Dodge Now

5 Credit Card Mistakes You Can’t Afford To Make

BONUS: The Best Credit Card Offers in April 2024 (keep reading below)

Credit cards can be a powerful tool if used properly.

The problem is that credit made people forget common sense.

But if you can set clear boundaries and use them like the majority of the population fails to do, then you’ll find that the benefits of credit cards far outweigh the costs.

Do it right and you’ll experience complimentary perks, airport lounge access, free hotels, comped flights and some good cash back on your every day spending.

Do it wrong and you’ll be 6 feet deep in debt crying into a napkin at the end of the month wondering where all of your money went.

Here are 5 mistakes to avoid at all costs:

Mistake #1: Only paying the minimum 

If you decide to make only the minimum payment on your credit card, you’re setting yourself up for failure.

The average credit card interest rate is about 22%…

Your outstanding balance can grow FAST if you decide to make only the minimum payment on your cards.

It also means that you’ll be hanging on to some of the highest interest debt a consumer can have, which is always a bad idea.

The avalanche method of paying off debt prioritizes eliminating high-interest debt first.

It’s in your best interest not to let yourself even get to that point.

How to avoid this:

1) Pay your balance off in full.

2) Don’t spend what you can’t pay off.

3) Search for lower interest rate credit cards if you know you’ll only be making the minimum payment (but try to avoid this as well).

Mistake #2: Not having notifications set up

I became better with my credit cards when I set up notifications.

Most credit card companies will allow you to set up notifications, either through text or email, but I personally prefer text.

Notifications I have set up:

• All purchases on my card so I can track what I’m buying .

• A reminder to pay off my card at the end of the month so I don’t forget.

• Weekly updates on my outstanding balance so I can make sure I’m not going overboard with my spending.

The great part about having notifications is that you will get notified if a purchase went through that may be fraudulent.

A lot of people pay off their balances at the end of the month without even looking at their transactions.

Don’t be that person.

Mistake #3: Not reading the fine print

The fine print is small for a reason.

Credit card companies, as well as most companies, pack information in the fine print that they know you won’t read.

This can include anything from fees, minimums, limited transactions, promotional period validity and more.

How to avoid this:

Take the time to read it. It will be worth it in the long run.

Don’t get caught paying for something that was mentioned, but overlooked because you were lazy and wanted to get through the application process quicker.

Also as an FYI, you can zoom in on your browser to make the fine print less… fine.

Mistake #4: Having too many credit cards

A common question: how many credit cards should you have in your wallet?

The answer: as many as you can comfortably pay off.

Benefits of multiple credit cards:

• Builds your credit faster

• Improves your credit mix

• Improves your credit utilization ratio

• Maximizes rewards

• More perks and benefits

Cons of multiple credit cards:

• Missed payments can damage your credit score

• More cards/balances to keep track of

• More susceptible to fraud or identity theft

• Tempts you to spend more with higher credit limits

How to avoid this:

In my personal opinion, no one should carry more than 3 credit cards at any given time.

I currently have 3:

• One that gives me points for travel and hotels

• One that gives me cash back on my purchases

• One for my corporation that I use for business expenses only

Mistake #5: Thinking credit is free money

When you have $0 in your bank account, using a credit card may seem like a no brainer.

But the psychology of credit can be dangerous.

Knowing you have until the end of the month to pay off the balance can have you thinking that you can afford whatever you’re buying.

This becomes even more dangerous when you explore the world of cash advances.

Interest starts slapping you in the face the second you make the withdrawal.

No thank you.

How to avoid this:

For the love of God, only make purchases you’re sure you’ll be able to cover when the statement is due.

Buying things to get those extra rewards can be tempting, but it does you no good if you’re trying to crawl out of a mountain of debt.

See below for the best credit cards on the market in April 2024.

The Best Credit Cards In April 2024

For Canadians:

• Scotiabank Passport Visa Infinite Card (For travel)

• Scotiabank Value Visa Card (For low interest)

• MBNA True Line Mastercard (For balance transfers)

Read more about these offers here.

For Americans:

• Chase Freedom Unlimited (For cash back)

• American Express Gold Card (For travel)

• Citi Simplicity Card (For balance transfers)

Read more about these offers here.

Alex (The Dividend Dominator)
Founder and CEO of Dividend Domination Inc.
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