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5 Common Credit Card Mistakes to Avoid

Use credit to elevate, not deflate

Tunji Onigbanjo
3 min readApr 20, 2021
Photo by CardMapr.nl on Unsplash

I see a credit card as a tool meant to elevate you. A tool that will put you in a position to qualify for any loan product you may want in the future. A credit card is a great tool when used correctly, but when it is used incorrectly, it can deflate you and put you in a financial position that can be difficult to get out of. When it comes to the five common credit card mistakes to avoid, they are as followed:

1. Only Making Minimum Payments

2. Missing a Payment

3. Not Reviewing Your Billing Statement

4. Not Knowing the Terms and Conditions of Your Credit Card

5. Applying for Too Many Credit Cards at Once

1. Only Making Minimum Payments

When you only make minimum payments on your credit card, you are putting yourself at risk of being faced with high-interest rates, such as 14.6%, which is approximately the average interest rate for credit cards. You do not want to be faced with high-interest rates, which is why it is important always to pay your full statement balance every month. Do not turn small expenses into unnecessarily large expenses.

2. Missing a Payment

Your payment history makes up 35% of your FICO Score. It has the largest impact on your FICO Score, which means you do not want to miss a payment. That is why it is important to pay your full statement balance every month. To make things easier for yourself, set it up to be paid automatically every month. Make your financial life easier for yourself.

3. Not Reviewing Your Billing Statement

Before your automated fully monthly statement balance payments go through, make sure to review your billing statement. You do not want to have to pay for any possible mistakes on your billing statement. In reviewing it, you are making sure that there are only purchases you or an authorized user has made, and not anyone else has made.

4. Not Knowing the Terms and Conditions of Your Credit Card

You must have an understanding of the terms and conditions of your credit card. In understanding the terms and conditions of your credit card, you are making sure that there is nothing predatory about it. Also, you are making sure you understand potential fees, interest rates, benefits, and disclaimers.

5. Applying for Too Many Credit Cards at Once

New credit makes up 10% of your FICO Score. Even though it has a low impact on your FICO Score, it does not mean that you should be applying to every single new credit card you come across. It is typically recommended to apply to no more than one credit card every six months. When you apply for four credit cards within a six-month period and looking to apply for a fifth credit card, you have significantly increased the likelihood of getting declined due to you appearing as a greater risk to creditors.

In understanding these five common mistakes, you will be able to avoid them. Being able to use credit appropriately is not difficult. It all comes down to your financial discipline. Some things in life are not worth experiencing. I can promise you never want to experience going into debt because you did not use credit appropriately. Make life easier for yourself by using credit to rise to new financial levels, not fall to financial lows.

Tunji Onigbanjo
Tunji Onigbanjo

Written by Tunji Onigbanjo

Financial literacy is important.

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