TOP CREDIT CARD MISTAKES TO AVOID (FOR MILITARY MEMBERS)
TABLE OF CONTENTS
Credit cards can be a great tool, but if you use them the wrong way, they can cost you hundreds—or even thousands—of dollars. Unfortunately, this isn’t something that’s talked about enough in the military. That’s why I’m breaking down the most common credit card mistakes to avoid, so you can stay on top of your finances and avoid unnecessary stress.
MISTAKE #1: USING YOUR FULL CREDIT LIMIT
Your credit limit is the maximum amount you can spend on your card. For example, if your limit is $5,000 and you spend $, you’ve maxed out your card. This can hurt your credit score because banks see it as a red flag—it looks like you’re in financial trouble. A lower credit score can make it harder to get loans or better credit cards in the future.
Tip: Experts recommend using no more than 30% of your credit limit. Personally, I try to stay below 10% to be safe. If you’re just starting out with a low credit limit, only use your card for small purchases and pay it off right away. Over time, you can build your credit and get higher limits.
MISTAKE #2: CARRYING A BALANCE
Carrying a balance means you haven’t paid off your credit card by the due date. When this happens, the credit card company charges you interest, which can add up fast. Right now, the average interest rate is around 20-25%. For example, if you owe $10,000 and only pay $200 a month, it could take over 9 years to pay it off!
Tip: Always pay off your balance in full each month. Set up automatic payments so you never forget. This will save you money on interest and keep your credit score healthy.
MISTAKE #3: GETTING A CASH ADVANCE
A cash advance is when you use your credit card to withdraw cash from an ATM or bank. While it gives you quick access to money, it comes with high interest rates and fees. Unlike regular purchases, interest starts adding up immediately—there’s no grace period.
Tip: Avoid cash advances unless it’s a true emergency. The fees and interest can dig you into a deep financial hole.
MISTAKE #4: ONLY PAYING THE MINIMUM PAYMENT
Paying just the minimum amount (usually $20−$40) might seem like you’re staying on top of your bill, but it’s not enough. You’ll end up paying more in interest over time, and it could take years to pay off your debt.
Tip: Pay as much as you can each month, or better yet, pay off the full balance. Only spend what you can afford to pay back.
MISTAKE #5: NOT USING THE RIGHT CREDIT CARD
There are tons of credit cards out there, and not all of them are right for you. Some offer 0% APR for a few months, which is great for paying off debt. Others give cash back or travel points for specific purchases like gas or groceries.
Tip: Choose a card that fits your spending habits and financial goals. For example, if you spend a lot on gas, get a card that offers cash back for gas purchases. Using the right card can save you money and earn you rewards.
MISTAKE #6: NOT USING YOUR CREDIT CARD AT ALL
You might think, “If credit cards are so risky, I’ll just avoid using them.” But not using your card can also hurt your credit score. If you don’t use a card for a long time, the company might close your account, which can lower your credit score.
Tip: Use your card for small, regular purchases like your phone bill or a subscription. Set up automatic payments to pay off the balance each month. This keeps your account active and helps build your credit.
FINAL THOUGHTS
Credit cards can be a powerful tool if used correctly, but they can also lead to financial trouble if you’re not careful. Avoid these common mistakes, and you’ll be on your way to building a strong credit score and saving money. Remember, the key is to spend responsibly, pay off your balance in full, and choose the right card for your needs.
If you found this guide helpful, check out the links below for my favorite credit cards and tips. And if you’re in the military, share this with your buddies—it could save them a lot of stress and money! Thanks for reading, and stay financially fit!
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