Most people view credit cards as a necessity for their day-to-day transactions. Whether you wish to buy a car, house, an expensive mobile phone, or go on a dreamy vacation, a credit card appears to be an important financial tool to enable the same. However, most people are habituated to using their credit cards in ways that put their financial health in a lurch. Here are some of the common credit mistakes that you should steer clear from:

• Maxing credit card limit

Maxing out your credit card limit is the most common and dangerous mistake most individuals tend to make. The more you max out your limit, the more your credit utilization ratio drives up. The credit utilization ratio plays an important role in the calculation of a credit score. If you max out your credit card often, then your credit score will go down drastically. Additionally, any loan that you apply for may take longer to be approved and you may not have a limit to use when you actually need it.

• Acquiring too many credit cards

Having more than one credit card under your name may put your financial health at risk. It exposes you to potential harm from prospective lenders and can also damage your credit score. Also, a credit card opens up more purchasing power, which may compel you to buy things you don’t really need. Multiple cards can also make it difficult to keep track of expenses. Incurring debt that you may not be able to keep up with is harmful for your financial wellbeing.

• Untimely payments

Acquire a credit card only if you have the ability to make timely payments on your credit card bill. Carrying forward an unpaid balance to the next month will hike your card’s annual percentage rate. Also, if you don’t meet your payment deadline, you will incur a late fee and your interest rate may also increase. In case you have already missed a credit card payment, it’s best that you inform your bank and request a temporary payment arrangement. However, when it comes to credit card payments, it is better to pay in full.

• Not checking billing statement

Checking your credit card statements regularly will not only help you pay the bill on time but also confirm that the charges mentioned in it are correct. You may already be aware of credit card theft and fraud. In 80 percent of fraud cases, the victims have been previously unaware that they have been scammed. Even though your credit card may be 100 percent safe as advertised by your bank, fraudsters can sell your credit card information on the dark web. Avoid this common credit card mistake by going through your billing statement as soon as it arrives. If you spot an error in a transaction early on, then you have ample time to report it. Practising credit card bill checks in a timely manner will be beneficial in the long run.