Credit cards can be great financial tools when they are used correctly. They offer a variety of different perks, from providing you with free bonuses and rewards when making purchases to helping you increase your credit score.

However, there are things you should never do with a credit card. Mismanaging your finances with credit cards can quickly result in an enormous level of stress, poor credit ratings, and unmanageable debt. 

Only Making Minimum Payments

Too many cardholders only make minimum payments and ignore their growing balance. If you do this for a prolonged period, your interest rates can increase and you can severely damage your credit score.

Your credit score is directly linked to the utilization of your credit card and how much of its available credit you access. Remember, try to keep it below 30% to avoid your credit taking a hit. 

For example, if you have a limit of $10,000 on your card, your balance should avoid exceeding $3,000. It’s best to use your card in a smart way and only put expenses on it you can afford to pay before your bill becomes due.

Failing to Monitor Your Statements

You are probably already aware of credit card fraud and take precautions to avoid having your credit card details ending up in the wrong hands. However, scammers are changing their way of operating, and many work by adding small charges to a variety of different cards. They rely on owners being complacent and not checking their statements before making payments.

In many cases, if you notice charges that appear fraudulent, disputing them with your credit card company is easy. You can also quickly cancel the card and ask for a new card to be issued. However, if you notice these fraudulent transactions after paying your bill, recovering your money becomes increasingly difficult.

Making Late Payments

Not keeping on top of your debt obligations can quickly become a problematic habit. This is especially true when it comes to credit card bills. Every time you miss a payment, they will charge you a late fee.

After a second late payment, the credit card company will report this to the credit rating agency driving down your score and making it increasingly difficult for you to borrow money. To prevent a cycle of late credit card payments, experts advise you to schedule your payments and set reminders on your calendar before your due date. Combining this a reduction in spending to an affordable level will make meeting your credit card debt more achievable.

Canceling Old Credit Cards

It’s not uncommon for people to have multiple credit cards lying around. Before you rush to close these accounts remember your credit card history and its length are key determining factors for calculating a credit score. If you have a long-standing relationship with a credit card company, before you close an account, look at the annual fees and work out whether keeping the account open is more beneficial to you.

Not negotiating better terms

One of the biggest mistakes credit card owners make when they find themselves in financial trouble is that they fail to discuss their situation with their credit card companies.

Most companies will do a risk assessment and to ensure you repay your debt, they may offer you a lower interest rate or adjust your card limit. It is possible to negotiate this deal once with your credit card company and as long as you’re a good customer.