10 Bad Credit Card Habits You Must Break

Bad habits are easy to fall into. A one-time exception becomes part of your routine and before you know it, you’re stuck in a rut that’s next to impossible to break out of.

Bad credit habits can wreak havoc on your credit score, lead you into debt, and cause a number of other financial problems that threaten your stability and long-term goals. Consider your credit habits and if you’re doing any of these, replace it with a better habit right away.

Not reading your credit card statements.

Upset woman holding credit card
Martin Dimitrov/iStock

With lots of different bills coming in the mail (or email) every month, reading every single one of them can be mind-numbingly boring, not to mention time-consuming. But, there are benefits to reading your credit card statements, like catching unauthorized credit card charges or billing errors.

Don't just check your credit card statement for your balance and payment information. Review the entire statement to verify your account activity. Report errors to your credit card issuer right away to prevent being held liable for charges you never made.

Making purchases without checking your credit limit or available credit.

Don’t take for granted that your available credit is the same as the last time you checked your credit, especially if you last checked several days or weeks ago. There’s a chance you forgot about some purchases, a payment wasn’t applied correctly, or that your credit limit was lowered since you last checked.

A quick phone call or tap on your smartphone app will quickly confirm that you have enough available credit for your purchase. Plus it saves you the embarrassment of having your credit card declined in the event that you don't have enough available credit.

Pulling out your credit card instead of your debit card.

Unless you’re using your credit card to rack up rewards and you pay off your credit card balance every month, you shouldn’t opt to use your credit card over your debit card. Your debit card is your direct access to the funds you should use for everyday purchases, like groceries, gas, clothing, and other expenses. If you use your credit card, it should be a conscious decision with a concrete plan for paying off what you’re charging.

Paying only the minimum.

It’s so much easier to make the minimum payment than to figure if and how much extra you can afford to put towards your credit card bill. But, when you’re making only the minimum payment, you’re not making much progress toward paying off your credit card bill. And unless you have a very low balance or a 0% interest promotion, you’re probably paying much more in finance charges than you have to.

Send more than the minimum if you can or at the very least, pay the amount required to pay off your balance in 36 months, which is also printed on your billing statement. You'll save money on interest plus you put yourself closer to having your balance completely paid off.

Habitually paying your credit card late.

In an age where you can schedule your credit card payments days in advance, there’s really no excuse for habitually late payments. If you’re constantly forgetting to send your credit card payments, then you need a system to get rid of this bad habit and start paying your credit card on time.

Paying on time saves you money in late fees and higher interest rates. Plus, it protects your credit from the effects of a late payment.

Transferring balances to avoid payments.

Balance transfers promotions are an excellent strategy for paying off a high interest rate balance. If you’re constantly chasing balance transfer promotions as a way to avoid paying payments on your credit card, you’re engaging in a bad habit that could hurt you in the long run.

Balance transfers typically have fees that will increase your overall balance if you’re never making payments toward the transfer. And if you’re making purchases on the card with a balance transfer promotion, you’re compounding the problem.

Credit card issuers make the rules in this game and eventually, they’ll make a move that will kill your strategy—your available credit won’t be high enough for the balance transfer, you won’t qualify for the promotional rate, or worse, your application will be denied altogether.

Taking out cash advances.

Cash advances are one of the most expensive types of credit card transactions. They typically have the highest interest rate and they don’t have a grace period, so you start being charged interest right away. On top of that, you have to pay a cash advance fee each time you use your credit card to get cash.

Your credit cards should never be a source of cash, so if you’ve fallen into this habit, stop right away. Figure out a way to cut back on your spending so you have more cash from your salary or wages and you won’t have to rely on your credit cards for cash.

Applying for new credit cards you don't need.

Low interest rate promotions and sign up bonuses are so inviting. You may sign up for every new promotion that’s offered, even if you already have enough credit cards. It’s a slippery slope. Not only can new credit card applications hurt your credit score, they can also create an opportunity to get into debt. One month you’re handling your credit cards well and then a few credit cards later, you’re in over your head.

Buying things you can't afford.

Next to habitually making late payments, this is arguably the worst credit card habit to have. This is how you get into debt. If there are things you want, but can’t afford to pay for them, you should wait to purchase them until you can afford them. The satisfaction you get from having things now won’t comfort you when you have to deal with the debt you created to get those things.

Before you swipe for a purchase, always assess whether you can truly afford it. If you can’t, be brave enough to deny yourself the instant gratification for financial peace of mind later on down the road.

Letting credit cards go unused.

In a way, not using your credit cards can be just as bad as using them too much. If your credit cards go dormant for too long, many credit scoring formulas disregard them in your credit score. On top of that, your credit card issuer may cancel your credit card after you haven’t used it for several months. Use your credit cards at least once every three to six months to keep them active.