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A credit card can be a great financial help in many situations and saves you from asking for money from anyone. Be it a month-end cash crunch, some emergency cash needs, additional financial requirements or even when you want to buy in a sale but have little money in hand; a credit card can be the best helping hand. Despite being the instant and easy credit support it often becomes a burden on you for its extra charges when you don’t pay your dues and other hidden charges.

Besides, have you ever wondered if you are making some credit card mistakes that are elevating your liabilities? Or if you are planning to take a credit card but are being discouraged by others considering it’s more of a liability than a facility. Chances are that they are also making some common credit card mistakes or before availing a credit card, you want to know the ten worst credit card mistakes you should avoid. Well, a few credit card mistakes are discussed here that can save you from these cards being a liability to you.

5 Worst Credit Card Mistakes

  1. Paying only the minimum due amount: While you can pay the minimum dues for sure, it’s not advised to pay only the minimum due. Paying only the minimum amount will not only rack up the interest but also chances are that you fall into debt because of the hefty charges levied. So, timely payments are a must if you want to save yourself from any debt accumulation.
  2. Not knowing the interest rates and annual fees: Before you start using a credit card, understand clearly the rates and charges involved and how they are calculated.

Following are the rates and fees that usually come with a credit card:

  • Annual maintenance fees: Charged for holding the card.
  • Purchase rates: Charged annually on the purchases, paid in 12 parts if payments are carried monthly.
  • Balance transfer rates:  Similar to purchase rates. This applies to balance transfers when other dues are brought into a credit card.
  • Penalty: Higher than the usual interest rate, applied on non-payment of the due.
  • Late payment fees: Applied on late payment and increases with the time.
  • Foreign transaction fees: Applied on purchases made out of the homeland.
  • Balance transfer fee: Applied when debt is transferred on any other credit line.
  1. Taking out cash advance: Taking out cash from a credit card can be the biggest of the top five worst credit card mistakes. It will not only accrue the interest at a higher rate but also has no grace period for repayment. Also, cash advance fees are charged that can be up to 5% of the total withdrawal amount.
  2. Applying for multiple credit cards too often: Every time you apply for a credit card a new credit inquiry is done. The more the credit inquiries, the higher the chances you appear to lenders as credit hungry, which can negatively impact your credit score. For taking the advantage of an APR-free period on a new credit card, a gap of at least 6 months between two consecutive credit cards is advised.
  3. Closing the oldest credit card:  The average holding time of a credit card is one factor in building your credit score. When closed, the length of time is reduced affecting your credit score making it a credit card mistake. Unless the APR of a credit card is not under weighing the advantages it provides, closing the oldest card is not suggested.

What is an Overpaid Credit Card?

When you pay more than due on a credit card, it’s called an overpaid credit card. Often overpaid credit cards occur by mistake when you manually pay the dues before receiving the bills from the merchant. This will not impact your credit score but it will also not help in building it.

Solutions for Overpaid Credit Card

  1. Let the negative balance roll over next month: The overpaid sum reflects as credit in the negative balance that you can carry forward next month and cover the due that will occur in future. If not used, the provider will issue a refund itself.
  2. Request a refund: You can write a request for a refund to your provider and ask for the return of the extra paid money. Some lenders also provide online or telephonic refund facilities. Whether to refund or roll over the negative balance is up to the lender.
  3. Enable auto-payment: You can set up the auto-debit option for full or minimum due on a credit card along with the preferable date for you. This will also help in keeping a check on scheduled payments and not missing out on due payments.

Overpayment on a credit card can be one of the common credit card mistakes but has easy solutions as well. If temporary, this will not hamper your credit score, and you can easily cover up your extra paid sum with your upcoming purchases.


1. Which credit card mistake is the most serious?
The severity of the credit card mistakes can vary from user to user and depends on how it was taken care of. But “paying late” can be a mistake that is common for everyone and impacts credit score badly while also increasing the debt.

2. How do credit cards impact credit rating?

The credit card holds approx. 35% of your credit score so having one will help generate your credit history. At the same time, if not used wisely and dues are not paid back on time, it can hamper your credit health a big deal.

3. When should I avoid using a credit card?

Purchases you should avoid from your credit card:

  • While applying for a mortgage
  • Big vacations
  • Cash advances, down payments or balance transfer
  • Huge wedding expenses
  • When you didn’t pay the outstanding balance
  • When you can’t afford to repay the money

4. What is the 30 credit utilization rule?

The 30 credit utilization rule says that you should use less than 30% of your total approved credit limit. It’s just a guideline and not a mandatory rule. Using less than 30% of your credit limit is better for your credit score.

5. Can I buy something more than my credit card limit?

Yes, with the “over-limit facility” you can buy more than your credit limit but it is not recommended. So, avoid maxing out your card.