Having a credit card comes with a lot of responsibility — there are a lot of things you have to remember to do, like pay your bills on time and monitor your statements for anything problematic. But there are also some things you should know not to do with your credit card. Here are five of those.
1. Skip Payments
Your credit card can be a good tool to help you make large purchases while building a strong credit history and good credit scores. However, if you don’t pay the amount back, it can be detrimental.
“Skipping a credit card payment is never a good thing, since the account will fall behind and will likely [be reported] to the credit bureau as being delinquent,” Bruce McClary, the vice president of communications for the National Foundation for Credit Counseling, said in an email. “They are also likely to add late fees and increase the interest rate as a penalty, which makes a missed payment a costly decision as well.”
2. Max It Out
Maxing out your credit card is another financial behavior you want to avoid at all costs, McClary said. Not only can it have costly repercussions, he explained, but it “looks bad on your credit and can cause your credit rating to take a hit,” which, in turn, “makes it more difficult to qualify for the most affordable terms when applying for new credit in the future.”
For best credit scoring results, it’s generally recommended to keep the amount of debt you’re carrying on a credit card below ideally 10%, or at least 30%, of its total limit.
3. Share Card Information on Social Media
“Never share anything on social media that you wouldn’t want the world to know,” McClary said. “Posting updates that indicate where you bank, how much you spend and what credit cards you [have] allows online predators to have useful tools that can help them steal your identity and your money.”
4. Forget an Old Card
“Not keeping an eye on your account activity, even on an open credit card you no longer use, can be a dangerous oversight,” McClary said. “You might miss when annual fees are applied, which may lead to late fees and a delinquent account status if not paid by the listed due dates.”
McClary also noted that if you don’t monitor your accounts, you may miss any signs your identity has been stolen, which he said can lead to “lasting and costly consequences.” (This guide explains what you should do if you’re a victim of identity theft.)
5. Paying an Annual Fee on a Card You Don’t Use
Some credit cards with annual fees offer perks that make them very appealing. But if you have one where you are spending more on the fee than you’re getting back in rewards, you’re essentially losing money.
“While closing an inactive account is a decision that is up to each cardholder, it is wise to consider the cost of keeping an account that comes with recurring user fees,” McClary said.
Instead, you may want to consider switching to credit cards with no annual fee, asking to have the fee waived on the existing card or downgrading with your current issuer to one of their no-fee card with a similar credit limit to keep an account closure from potentially impacting your credit score.
These are some of the things you should think twice about doing with your credit card, but one thing you certainly should consider is monitoring your credit. (You can see two of your credit scores for free, updated each month, on Credit.com.)
Knowing your credit scores before you apply for any new lines of credit will help you figure out the terms and conditions you can qualify for and if you’re likely to get approved for certain types of cards, like the best cash rewards credit cards in America (which you can read about here). And even if you aren’t looking to open a new line of credit, it’s a good idea to keep an eye on your credit scores for any signs of fraud, like accounts you didn’t open or a sudden drop in your credit scores.
More on Credit Cards:
- Credit.com’s Expert Credit Card Shopping Tips
- How to Get a Credit Card With Good Credit
- How Secured Cards Can Help Build Credit