7 Costly Credit Card Mistakes You Make In Your 20s

Ever wonder what you could do wrong when using your credit card? Here are some common mistakes to avoid.

Getting your very first credit card is an important step towards financial maturity. It can also be intimidating. There are many things that can go amazingly right when you start your credit history, and so many others that can go terribly wrong. If you are about to get a credit card, or if you have been using one recklessly for a while now, you must always be aware of potential issues that can cost you a lot of money in the long run. In order to avoid them, here are some of the worst mistakes you can make with your credit card when you’re inexperienced. 

1) Paying late

Let’s start with the obvious. Don’t let the deadline go by without making your payments. Interests increase, fees apply, and you end up spending far more than you would otherwise. Furthermore, your credit record gets tarnished: you’ll get a negative credit score, which will noticeably limit your options in the future (especially if tardiness becomes a habit). So, paying your credit card(s) on time should definitely be a priority.

2) Sharing your credit card information with just anyone

Another seemingly obvious one, but it’s surprisingly easy to make this mistake even without realizing it. Credit cards have several information items that must be provided in order to make online payments, but a quick photograph or information stored in the wrong website can give them all away. If anyone catches a glimpse of your CVV (the “secret” three-digit number on the back of your card), everything else is a piece of cake. Be really careful about who can access your credit card details, both online and in person.

Photo: STIL

3) Maxing out your credit

There are several disadvantages to maxing out your credit card. First, you run the risk of incurring late fees for going over the limit, which might mean a penalty interest rate. Second, it makes you more vulnerable whenever you have issues with paying too close to the limit date. Third, it doesn’t give you any maneuvering room in case of emergencies. So, it’s always better if you keep a good balance on your credit. 

4) Taking your time before reporting a lost or stolen credit card

You should always report and cancel a credit card the minute you realize it’s gone. Leaving it for later makes you more vulnerable and liable for undesired charges, which can easily build up the more times you let them happen. Don’t merely expect the bank to understand; simply put, it’s an unnecessary risk.

5) Lending your credit card

Not only can anyone who holds your card get all the necessary information to make purchases, but also, if they are allowed to keep it for a while, there’s too many ways they can make some serious damage to your credit score, intentionally or not. They could purchase more things than you can afford, or give someone else the card. They can register it at any number of sites in order to make online payments months or even years after you lent it to them. Maybe they’ll not be as careful as you would be (it’s not their credit, after all), and let someone clone your card without even noticing. 

Photo: Guerric de Ternay

6) Thinking of your credit as long-term financing

In line with the first item on this list, never ever think of your credit card as anything more than 21-day credit. That’s it. You must be able to pay this debt in less than a month; otherwise, it’ll be way too costly, as your interest rates will be ridiculously high. If you need long-term credit, or if you’re unsure you can come up with the cash to pay within a month, it’s better not to think about putting any charges on your credit card at all. Even monthly charges can add up really quickly, so you must keep these to a minimum. 

7) Combining personal and business transactions

The best thing you can do from the beginning of your credit history is to keep things neat. It helps your accountant, it helps with taxes, and it helps your finances. It will help you avoid several possible tax issues later in life, and it’ll make it far easier to understand exactly what’s going on whenever you wonder why you have less (or more) money than you thought. 

Photo: Code mnml

This list is not supposed to intimidate you even more. On the contrary, it’s here to help make things safe and easy for you. Even if you already knew all about these mistakes, it's always good to be reminded of them, so you don't fall prey to distractions or overconfidence. So, take care of that credit history, and happy shopping!