Poor Credit Card Habits To Break In 2024

A Note From Patricia:

Hello and welcome to Forbes Advisor’s Weekly Brief, where each week we dive into the realities of consumer finance and empower you with knowledge to help make your financial journey easier.?

I’m sure most people want to save money, pay off debt, and improve their credit score this year, but those things are easier said than done. If your goals for 2024 include becoming more financially empowered and spend-savvy, getting real about your unhealthy credit card habits can be your first step toward financial well-being.?

This week, we’ll discuss some of the most crushing credit card habits to break this year, as well as smart spending alternatives to better yourself and your wallet in 2024.

We would love to hear your thoughts or experiences in the comments section below. Have a wonderful day and hope to hear from you soon.

Sincerely,

Patricia Louis

Editor, Forbes Advisor

QOTD: Do you have any bad spending habits that you’re working on this year? Tell us about them in the comments below.?

Poor Credit Card Habits To Break In 2024

Swiping your card is easy, but financial control is not. Unlocking the power of your plastic means incorporating responsible credit card practices to help lower debt and build a strong credit history.

Here are some of the most common mistakes that credit card holders make and how you can avoid them:?

1. Making Only the Minimum Payments

At first glance, it may seem convenient and budget-friendly to only pay the minimum payment on your credit card statement. Doing so, however, can cause your balance to quickly snowball into a mountain of debt (unless you’re currently within a 0% intro APR period).

Most credit cards are a high-interest form of debt—with the average interest rate currently at 27.79%, according to Forbes Advisor’s weekly credit card rates report—and can leave you with a significantly larger financial burden in the long run if you only make minimum payments.?

Smarter alternative: The most ideal option is to pay your credit card balance off in full each month to avoid any interest charges. If you’re unable to do that, speed up the repayment process by paying more than the minimum payment. Use a credit card repayment calculator to help you understand how quickly you can repay your debt and how much interest you’ll pay.?

2. Maxing Out Your Credit Limit

You should never spend every dollar of your credit limit, no matter how high it may be. Your credit utilization ratio—the amount of credit you use out of the credit you have available—is a crucial component of your credit score, and maxing it out will lower your score.?

Smarter alternative: Try to keep your credit utilization as low as you can, on each individual card and across all cards. The ideal number is 30% or lower, according to experts. That means if you have a $1,000 credit limit, keeping your balance at or below $300 will be to your advantage. Any more than that, and lenders may worry you’ll have trouble repaying what you owe.

3. Opening (And Closing) Too Many Credit Cards

Applying for too many cards and closing old accounts can negatively impact your credit score. Lenders look at how many lines of credit you have, as well as the length of your credit history. Not having a long account history—or too many recent inquiries—will be seen by lenders as a red flag.?

Smarter alternative: Be intentional and strategic about what cards you apply for.. Wait until a great welcome bonus or other opportunity presents itself to determine if it’s worth it to open a new line of credit.

To learn more about six of the most common credit card habits and how to break them in 2024, read more here.

Related Stories:?

• How Many Credit Cards Should I Have?
• Best Credit Cards Of January 2024
• 10 Most Common Credit Card Mistakes To Avoid In 2024?

Here’s what else is going on in the news this week:

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