Four Common Credit Card Pitfalls to Avoid


A credit card is one of a variety of tools available to consumers to help fund purchases that in most cases are out of their immediate reach. The use of credit cards can generate strong opinions. While it is true that the misuse of credit cards can lead a consumer to generate more debt than they can handle, used responsibly, credit cards can be inherently helpful. 

It’s important to know some of the best practices for using a credit card so you don’t fall into some of the common difficulties of debt. If you are already managing high-interest credit card debt, you can use the following guidelines to help keep you from potentially finding yourself in unmanageable financial waters. 

Here are four common credit card drawbacks to avoid at all costs:

1. If You’ll abuse them, avoid them

If you have the propensity to overspend, currently working through a debt consolidation plan, or have taken out a debt consolidation loan, it may not be an ideal time to open a credit account. If you know you are susceptible to running up balances or frequent overspending, consider whether a credit card is the best option for you. A more appropriate alternative may be committing to using cash for any and all large purchases you intend to make.

If you feel you are likely to become delinquent, or carry a balance that will accrue interest, consider not purchasing anything on credit until you can stabilize your financial direction. 

2. Keep track of your balances

If you carry a balance, interest will accrue. Banks profit by issuing you credit to make purchases. Some interest rates can exceed 20 percent or more, so carrying a balance can lead many consumers into a position where the overall balance increase can become overwhelming. 

To avoid this snag, carefully track your scheduled minimum payment due dates and be sure not to miss them. A good practice is to make a monthly habit of simply paying off the balance in full – even if the full amount isn’t necessarily due. This eliminates the risk of acquiring an avalanche of interest fees to your balance. 

3. Opening too many credit cards can open a can of worms

The more cards you open, the more annual fees you will accrue. Keep in mind that credit cards are not meant to be investment opportunities, no matter what credit card companies try to sell you. A credit card is simply a tool, so be sure to carefully evaluate the benefits and potential drawbacks before you open a new account.

Opening too many credit cards can also lead to financial challenges. It is far more difficult to keep up with payment schedules, balances, and deadlines when you are juggling multiple accounts, so consider keeping your credit accounts simple and streamlined.

4. If you can’t afford it, don’t buy it

Wiser words have never been spoken. Avoid the temptation to use a credit card as a vehicle to buy things you can’t afford. Credit cards are convenient tools, not an excuse to “buy now, worry later.”

Two good questions to ask yourself when considering a purchase: 

  1. Do you have the cash to payoff the purchase? 
  2. Do you have the anticipated revenue stream, cash flow, or income to quickly pay off the debt before the payment deadline.

Find an advisor to help you spend wisely

Remember to utilize your cards as a tool. If you are concerned you may find yourself underwater and won’t be able to keep up with your payments, be sure to seek help before closing those accounts as this may negatively impact your credit score. Reach out to your trusted financial debt resolution advisor. You may find yourself in a better position to navigate and resolve your debt.