common credit card mistakesGiven the big rewards and intro bonuses, credit-building opportunities and fraud protection that many of them offer, credit cards can reap huge benefits for you and enhance your life in numerous ways. That said, it’s important to make sure you’re doing the credit card holder thing right, as not doing so could result in lost opportunities or even damage to your credit. To prevent such situations from happening to you, continue reading to learn about five common credit card mistakes and what you can do to avoid making them.

Are you making these common credit card mistakes?

Not getting the right card for you

Believe it or not, one of the most common credit card mistakes can occur before you even have a card to use — choosing the wrong one. Nowadays, there are all sorts of credit cards out there, offering diverse kinds of perks and benefits, so there isn’t much reason not to get a credit card that benefits you. For example, if you seldom travel, a travel credit card that earns you miles doesn’t make much sense to own. It would be far more beneficial to get a card that befits your lifestyle, whatever that may be. Maybe you’re an amateur chef who spends every spare penny at the grocery store.

It’s paramount to do your research before applying for a card not only to ensure you’re getting the most out of it, but also to avoid unnecessary damage to your credit. The kinds of cards you qualify for vary based on your credit scores, so applying for multiple cards at once or for a card that is outside your qualifications is a ticket to lowered credit scores and possibly getting rejected. By doing your research before you apply, you’ll be able to identify the perfect addition to your wallet.

Not reading credit card agreements

Number two on the list of common credit card mistakes? Not reading the credit card agreement. This is a misstep that many make, as terms and conditions documents tend to be long and often difficult to decipher. However, skipping over the fine print could lead to massive repercussions. That’s because they contain comprehensive information about credit card specifics that you’ll want to be aware of, such as what exactly your card’s benefits entail, important expiration dates for rewards and offers (like when your 0% intro APR comes to an end), any fees you might have to pay, card issuer policies and more.

As such, by reading these agreements, you can come away with a greater understanding of what to expect from your credit card. This will enable you to circumvent unpleasant, unexpected situations (e.g., getting charged fees you didn’t know about). Credit card issuers are bound by certain laws, but if you don’t know what your agreement says, you’ll never know if it’s violating your rights. To simplify the process of reading and understanding these documents, check out our guide to reading credit card agreements.

Carrying a balance or maxing out your card completely

Credit cards are great financial tools, but like any tool, there are right ways and wrong ways to wield them. Carrying a balance is something that many people do, and it won’t necessarily break you, but too high and too long can spell trouble in many ways. On the more obvious end, you’ll find yourself paying more in interest the longer you carry a balance, unless you are currently enjoying a 0% intro APR period. If you flirt with maxing out your credit card, you can also find yourself facing even bigger problems, including a high credit utilization ratio, overwhelming debt and possible default.

Your credit utilization ratio expresses the amount of credit you use in comparison to your available credit (i.e., your credit limit) across all of your revolving accounts. This significantly impacts your credit scores, as it makes up 30% of your score calculation. As such, it’s recommended that you to keep your ratio at around 30% or lower across all of your cards. Any ratio higher than that raises red flags and will bring down your scores. That said, note that not using your credit card can also have a negative impact, as a credit utilization ratio of 0% is looked upon by credit bureaus as a sign that you aren’t using any forms of credit. You can avoid these headaches entirely by regularly paying off your credit card statements in full. At the very least, you should strive to always pay more than the minimum balance due.

Not redeeming your rewards

If you have a credit card that earns rewards of any kind, you don’t want to forget to cash them in. Not redeeming your rewards is one of the common credit card mistakes you should remind yourself to not make, as many cards make it easy to earn rewards, and allowing them to languish only hurts you. If you aren’t sure how your card’s rewards program works, this is when reading the terms and conditions comes in handy, since it will cover all that you need to know about how to redeem your rewards and any expiration dates that may apply to them (some credit card rewards expire, while others will remain as long as your account is active). If you’re the forgetful sort, you can check with your card issuer to find out whether it’s possible to set up automatic rewards redemptions — that way, once you reach a certain threshold (e.g., $25 in rewards), your earnings will automatically be cashed in without you having to worry about it. Lost on how to get started? Call your credit card issuer for help, then follow their instructions to redeem and use what you’ve earned.

Not checking your credit card billing statements

One last credit card mistake you’ll want to avoid is failing to check your credit card billing statements. Doing so does take a bit of your time, but the consequences of not checking them could be disastrous — including missing billing errors or signs of fraudulent activities happening right under your nose. These issues can lead to credit report damage, lost money and more. For those reasons, it’s a wise idea to check your credit card billing statements and your account activity on the regular as a precautionary measure. By doing so and identifying any issues early on, you can take action sooner rather than later, allowing you to better protect yourself and your financial health.

It can be easy to slip up and not make the most of your credit card, but by following these guidelines, you can reduce your chances of making these common credit card mistakes. Read our credit card blog to keep learning everything you need to know about credit cards.

Disclaimer: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author’s alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This content was accurate at the time of this post, but card terms and conditions may change at any time. This site may be compensated through the credit card issuer Affiliate Program.