There are a few kinds of financial mistakes you definitely want to avoid when it comes to maintaining strong finances, and credit card errors are some of the most notable. While proper credit card management can go a long way to building your credit and improving your financial picture, certain mistakes can set you back in similar ways. 

At 1st Choice Money Center, we’re here to assist clients around Utah, Idaho, Delaware and Missouri with various financial needs, offering quality loan products like installment loans, title loans and other alternatives to predatory payday loans (which we refuse to offer due to their unethical nature). This two-part blog series will cover some basics on avoiding common credit card usage and management mistakes, including some bits on how our loan products may be able to assist you in some of these areas. 

Missing Payment Due Dates

Perhaps the single most common credit card mistake many people make is missing payment due dates. When you miss a payment, it has an adverse effect on your credit score: missed payments can lower your scores by as much as 100 points at once. And if this goes for too long without any correction, the account may be referred to collections and charged off – damaging your credit even further. 

To avoid this, there are a few methods you can use. Some prefer setting reminders on their phones, while others log into their accounts frequently to check balances and payment dates. In other cases, people will opt into automatic minimum payments for certain cards – but be warned that this can come with some risks as well. 

High Credit Card Balances

Another common credit card mistake is carrying high balances from month to month. This is what typically catches people and causes them to rack up significant amounts of credit card debt, as interest rates on these debts are often high. 

Our top tip in this area: Always pay more than the minimum payment when possible. Minimum payments are designed only to keep you on the hook for much longer periods, allowing the issuer to collect more money from you over time. This will also help your credit score, as it shows you are responsibly paying down debt. 

Closing Too Many Accounts

Some people believe that closing old or unused accounts is a good thing for their credit – but this isn’t always the case. In fact, closing too many accounts can lower your available credit and raise your utilization ratio (the amount of debt you have compared to your available credit). This can have a negative effect on your credit score. 

Instead, keep old accounts open and use them occasionally for small purchases. This will show responsible usage and increase the average age of accounts on your credit report, which can positively impact your score. 

In part two of our series, we’ll go over a few other common credit card mistakes and how to avoid them. In the meantime, if you’re in need of any kind of short-term loan product to assist you with your finances, our team at 1st Choice Money Center is here to help!