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Bottom Line Up Front

  • Build stronger credit by following healthy credit card habits.
  • Use cards responsibly—avoid making late payments or only paying the minimum.
  • Only have cards you need and don't max them out. Prioritize saving for emergencies.

Time to Read

2 minutes

May 11, 2022

The best credit cards can offer perks like frequent flyer miles, discounts, cash back and cash advances to pay for a night out before payday, but they’re definitely not just for fun. They’re serious business, especially when spending gets out of hand. To stay on the good side of credit, avoid these bad habits.

  1. Making late payments. Payment history can be very important to your credit score, which means paying on time is necessary to receive lower interest rates in the future. Missing payment due dates could mean late fees or lenders raising your interest charges—making it harder to make payments down the road. Designate a specific day to pay your credit card balances each month or sign up for online bill pay and create automatic payments.
  2. Only making the minimum payment. Paying the minimum on your balance each month won’t help much. The interest continuously accrues, so it’s tough to make a dent in your overall debt by only making small payments. Try to pay as much as you can up-front and continue making monthly payments between due dates if possible. If you charge so much on your card that you’re unable to pay off the entire balance, avoid using your card to until you’ve paid down the balance.
  3. Having too many cards. Keeping track of several credit card payments each month gets confusing and can lead to late payments. It’s easy to lose sight of how much you’re spending each month when it’s spread over several credit card companies. Try consolidating to 1 or 2 cards with a balance transfer to better track your spending. 
  4. Maxing out cards. Your credit score may also depend on your debt-to-available-credit ratio, or credit utilization. It’s best to pay down your balance regularly instead of letting it accumulate. It’s even better to pay it down to zero as often as you can.
  5. Not creating an emergency fund. Sometimes called a “rainy day fund,” an emergency fund is just that: money you save in case of unforeseen expenses—health issues, home repairs or unemployment. Without an emergency fund, these expenses could potentially force you to take on large amounts of credit card debt. Experts suggest maintaining 3 to 6 months’ worth of your income in a separate savings account. Even if you haven’t started a fund, setting aside money each month or automatically from every paycheck will create a cushion for unexpected expenses—a much safer strategy than relying only on credit cards.

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This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.