10 Expensive Credit Card Mistakes You Might Be Making (And How To Avoid Them)

Stephen Weyman

Today we have a guest post from blogger and credit card expert, Stephen Weyman. Stephen has developed a great tool for finding the right credit card for us here in Canada, and is dedicated to helping Canadians spend less while getting more for their hard-earned money.

Stephen founded the personal finance resource HowToSaveMoney in 2010, and is now also the CEO of creditcardGenius – a purely math-based credit card comparison site that ranks over 178 cards based on 126+ features.

I had a great interview with Stephen during the Canadian Financial Summit this year, and thought it would be great to have him on Build Wealth Canada too, in order to share some of his expertise.

Here’s Stephen, on some of the tops mistakes that you might be making with your credits cards:

Ahh, credit card mistakes.

They’re easy to make and they can be incredibly expensive.

Whether you’re carrying a large balance, you’ve signed up for a card you don’t know anything about, or you’re just juggling too many cards…well, you’re not alone. The good news is that there’s a solution for all of these.

With a little bit of work, a little bit of discipline, and a good hard look at your spending, you can come back from anything.

But first, let’s take a look to see if you’re making any of these money-sucking credit card mistakes.

1) You haven’t evaluated the value of your credit cards in a while

This happens to a lot of people. They open a bank account and just grab a credit card or 2 to go along with it. And that’s…it. There’s no more thought put into it, either because they think credit cards are all basically the same, or because they don’t realize just how different (and valuable) credit cards can be.

If this sounds like you, you should really take a few hours to take a look at the cards you have, and then do some research to see what other credit cards there are available. Chances are pretty good that there’s a better credit card out there for you, that will better meet your personal financial goals and preferences.

2) You’ve signed up for a credit card before doing any research

It can be tempting, I get it.

The bank teller says, “by the way…you qualify for a low rate…” and it all just goes downhill from there.

Like almost any purchase, it pays to do your research before applying for a credit card. You should be looking for a card that works best for you and your preferences.

Do you like the flexibility of cash back credit cards? There’s a card for that. Prefer the added peace of mind you get with loads of complimentary insurance? There’s a card out there for you.

On the other hand, if you don’t travel, it doesn’t make any sense to get a card that offers premium travel perks and rewards.

With so many different credit cards offering so many different perks, benefits, and rewards in Canada, there’s bound to be a card out there that’s best for your wallet. But doing the research can be daunting and time consuming.

But you’re in luck. There are credit card comparison tools out there that can help you narrow down the field to find the right card for you, whether you’re looking to maximize your rewards, pay less interest, or get some sweet travel perks.

Don’t just take the first reasonable-looking offer that comes along…use the tools available to do the research. It can actually be fun, especially when you start to realize just how many possibilities are available.

Finally, don’t forget to read the reviews.

3) You’re not reading the fine print

This is one of the most damaging mistakes you can make.

The internet means you almost never have to squint at the fine print any more. Almost all credit card agreements are available online, so you can simply zoom in and make that teeny text a comfortable (and more readable) size.

And while we tend to trust the banks and other merchants offering us these great-at-first-glance agreements, you really should take the time to be 100% sure that you know exactly what you’re signing up for.

It’s your money, and more importantly it’s your financial responsibility.

4) You have too many credit cards in your wallet

With all the amazing welcome bonuses out there, it’s easy to get caught up in the excitement and apply for some great cards.

But every card you apply for comes with a little hit to your credit score, and every credit card you have in your wallet increases your financial responsibility.

If you can’t pay off every balance each month, you’re going to get hit with interest charges. If you don’t keep track of which cards earn the most rewards at various merchants, you’re not going to get the most out of the cards you have.

More importantly, if you have so many cards that you’re not checking each account regularly to make sure it’s not being used fraudulently by someone else, well, you should probably consider keeping fewer cards in your wallet.

Everyone’s comfort level in this is going to be different. If you think you can handle juggling a large number of different cards, you probably can. But you’re not alone if you think that more than 1 or 2 is too much or too confusing.

If you decide that you have too many credit cards, it might be time to figure out which you want to keep, and which you would be better off letting go.

5) You’re not maximizing your rewards

This is a big one. You’ve got the card, now use it (responsibility).

Does your shiny new credit card have a high rewards multiplier on groceries? Swipe that at the grocery store, and pay it off with the money you were going to put on your debit card anyway. As long as you’re not putting purchases on the card that you aren’t going to be able to pay for before the interest charges kick in, paying with plastic is actually the best option. If you’re spending the money, why not also earn the rewards?

Think about the cash back or other rewards you could be raking in if you use your credit card like a pro.

6) You haven’t been taking advantage of the perks

Credit cards don’t just come with awesome rewards. Many also come with amazing benefits, like free roadside assistance, mobile device insurance, or airport lounge access.

Use them! Some of these benefits can be worth real money, but you have to know about them and, more importantly, you have to remember to use them.

If you’re not sure which perks and benefits your card has, there’s a handy tool for that. Simply search for your card and read through the information on its page. You may be surprised just how much more your card could be doing for you.

You’ve earned it. Search for your card using this credit card search and see what your card can do for you.

And you should always read through whatever literature comes in the mail with your card. Chances are you can save (or earn) even more just by reading what the issuer sends you.

7) You’re only making your minimum monthly payment

This is a very expensive mistake, and it’s easy to do. But you should really, really try to make more than the minimum monthly payment required for your credit card.

I’m not here to judge, of course. Sometimes life gets complicated, or maybe you had to make an emergency purchase. You know the bill is coming at the end of the month, and you’re dreading it. But, still, do everything you can to pay down your credit card balance as quickly as you can.

In addition to the high interest charges, carrying a large balance can have a significant negative impact on your credit score. You can always recover from this over time, but it’ll be a lot easier if you cut your spending and budget like a boss for a few months until you clear that balance.

It can be painful, but it’ll be worth it in the end.

8) You haven’t kept an eye on your account

Check your account. It’s free, and it’ll bring you one step closer to getting better at budgeting and at using your credit cards more responsibly.

Almost every bank and credit card issuer has a mobile app that makes it easy to check in on things. Get them. Use them. They’re a quick, easy, and free way to stay on top of your finances.

9) You’ve been treating your card like an extra paycheck

You’re out shopping and you see something awesome. “Hey, treat yourself,” you think, and end up making a bigger purchase than you can handle.

But you tell yourself that it’s just this one time…but then it happens again. Then again. And before you know it you’re carrying a balance from month to month to month. It’s a very slippery slope.

And by carrying that balance, you’re paying a ton in interest, suffering from unnecessary financial stress, and taking yourself ever further from real financial freedom.

Never make the mistake of treating your credit card like it’s free money. It’s really (really) not, and the effects of carrying that debt are a lot harsher than depriving yourself of that treat until you can actually afford it.

If you’re already carrying a balance on your credit card, it’s time to buckle down, be disciplined, and cut your spending until you can get that paid off in full. It’s worth it.

10) You tried to maximize your welcome bonuses by “churning” credit cards

While credit card churning can seem like an easy way to rack up some extra travel rewards or cash back, the truth is a bit different.

If you’re not careful, churning credit cards can do a lot of damage.

Every time you sign up for a new credit card, your credit score takes a hit when the credit card issuer does a “hard check” against it. These are usually relatively minor, but if you’re applying for several credit cards at once, these can add up fast.

And most credit cards with welcome bonuses worth churning also tend to have high annual fees. Often these fees are waived for the first year, but if you’re not careful you’ll end up paying those fees because you forget to close out the card before the year is up.

Most welcome bonuses also require minimum spends, which means you only get them if you spend a certain amount on the credit card within a certain amount of time. If you’re trying to churn a few credit cards at once, you could end up spending more on those credit cards than you can actually afford.

One of the primary guidelines when churning credit cards is to never pay interest (or annual fees, if you can help it), because that just cuts into your potential profits.

Are you making any of these mistakes?

You’re far from alone.

But now you know how to solve those credit card problems, and in time you’ll become a Credit Card Genius, too.

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