3 Big Credit Card Mistakes to Avoid in 2024

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If you’re using more than 30% of available credit or making some other common credit card mistakes, you could be hurting your finances. Learn more here. [[{“value”:”

Most people know the basics of credit cards. Interest rates are very high (21.47% as of November 2023), you should pay your balance in full when you can, and you should pay your bills on time to avoid late fees and the resulting damage to your credit score.

But there are some credit card mistakes that may not be so obvious and that could end up hurting your personal finances if you accidentally make them. You don’t want that to happen to you, so check out these three big errors and ensure you’re not guilty of making them as 2024 unfolds.

1. Using more than 30% of your available credit

You probably know you shouldn’t max out your credit cards, but were you aware that using more than 30% of the credit available to you could also hurt your credit score? Your credit utilization ratio is actually the second most important factor in determining your score, after payment history. It accounts for 30% of your score, so you really want to be sure you have an acceptable utilization ratio.

The lower your ratio is, the better for your score — but you’ll definitely want to keep it below 30% to avoid seeing a drop in your score of as much as 50 points. Be aware, too, that your card issuer may report your utilization ratio before your card is paid off. So even if you are repaying your bill in full each month, having a high balance can still hurt you. If that’s the case, you may want to ask your card issuer when it reports to the credit bureaus and try to pay down your balance before that occurs.

2. Not checking your statements regularly

You should be checking your credit card statements every month. You’ll want to do this for a few reasons:

To spot charges that don’t belong, which could indicate identity theft.To track patterns in your spending that could suggest you’re going overboard in specific areas, like dining out or entertainment.To make sure you’re not forgetting about any subscriptions on your credit cards like a streaming service you no longer use.

Failing to check your statements could mean you get stuck paying for charges you didn’t make, or that you end up wasting money on stuff that’s no longer providing a good value to you.

3. Failing to use all your cardholder perks

Most people focus on credit card rewards but forget about the other perks their card might offer. For example, many American Express cards come with extended warranties on purchases, which can give you added protection once a manufacturer’s warranty has expired.

Some cards also offer, among a whole host of other rewards:

Return protection in case you have trouble returning an itemTravel insuranceRental car insuranceEarly hotel check-inFree checked bags

If you don’t pay attention to these benefits, you could spend money on something that your card would have provided you for free.

Check out your card’s terms and conditions to be sure that you’re actually using all of the perks on offer. Not doing so could be a major mistake and cause an unnecessary hit to your personal finances.

Fortunately, all of these errors are easy to avoid now that you know about them, so you won’t end up missing out on perks or costing yourself any more money than necessary throughout 2024.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.American Express is an advertising partner of The Ascent, a Motley Fool company. Christy Bieber has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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