Credit cards are a handy financial tool if utilized responsibly. No wonder so many individuals use them. Some even sign up for multiple cards. As per estimates, a person holds an average of 3.8 credit cards in our country. However, misusing these cards can negatively impact a person’s credit score and worsen debt. Keeping this in mind, we have drawn up eight bad credit card habits you should avoid to make things easier.

Paying dues late
Many people forget or do not repay the amount when the agreed due date arrives. Failing to make the payment on time can lead to penalties. Those who delay payments by over 30 days might even attract a late payment mark on their credit report from major credit bureaus like Experian, Equifax, and TransUnion. Such a mark can stay for about seven years, which may hamper your ability to maintain or secure good credit later. Further, late payments may incur additional fees up to $35. But thankfully, there are many ways to avoid late payments. For instance, you could sign up for the auto-debit feature. If you do not have the funds to make a payment, it is better to ask the credit card issuer for a new due date, thus giving you more time to source the funding.

Withdrawing cash advances
Most companies allow cardholders to withdraw a specific portion of their credit as a cash advance. But this option incurs a hefty interest rate. Also, cash advances do not come with a grace period, so the user is charged interest as soon as the money is withdrawn. Hence, avoid getting cash advances unless it is an emergency.

Transferring balances to avoid late payments
Balance transfers are a great way to steer clear of high-interest rates. But some people are not mindful of how often they transfer balances, which hurts them in the long run. Transfers come with specific fees that increase and accumulate over the total balance if the individual never makes payments toward the transfer. Credit card companies also have specific rules that may lead to the rejection of a transfer application when it is used too many times. So, while you can transfer balances, ensure you make timely payments in the future.

Neglecting credit statements
Each month, the credit card company sends the cardholder a detailed statement with all their transactions. Unfortunately, many do not read the statement because it is time-consuming and tedious. This is a bad credit card habit as the credit card statement helps you understand each charge and interest added to the bill. It also helps identify incorrect or unauthorized fees and billing errors added to the card. Reporting these errors on time can prevent the bank from holding you liable for such charges.

Closing old credit accounts
It is common for individuals to hold three or more credit cards. But some think keeping too many cards active may damage their credit score. So they close older accounts. Contrary to popular belief, closing an older credit card may have a negative effect. It can reduce the average age of the cardholder’s accounts and negatively impact their credit score. Yes, it is practical to cancel an older card that draws higher interest and annual fees and has no card benefits. But first, consider upgrading or downgrading the respective card for better offers and maintaining the age of the account.

Paying only minimum dues
Many spend lavishly with a credit card, thinking they will only pay back the minimum amount due. However, it is a bad credit card habit. A cardholder who pays only the minimum is susceptible to higher interest in the long run. Therefore, we recommend repaying the total amount due every month. Those who cannot pay the full amount can try to pay a little more than the minimum. Doing so may help reduce the interest charged in the following month.

Using credit instead of debit
Most credit cards these days come with rewards, cashback, discounts, and other shopping benefits. So it is no surprise why someone would prefer using a credit card to purchase groceries and other utilities instead of a debit card. The problem arises when a user overspends on a credit card. Excessive credit may lead to added interest if the user cannot repay the total amount due on time. So when it comes to shopping for daily purchases, it is better to be mindful of how much is spent using a credit card. To avoid debt, use a debit card instead.

Not using active credit cards
Not using a credit card after signing up for it is also a bad habit. A dormant card might be disregarded from the credit score based on formulas set by the issuing company. Moreover, the bank may cancel the card if not utilized for several months. So, we recommended using the card at least once every three to six months to keep it active.

Avoiding these bad credit card habits can help you escape the debt trap and avoid hefty fees and interest rates over the years that can take a toll on your monthly budget.