5 Common Credit Card Mistakes New Cardholders Make and How to Avoid Them

Credit cards help build credit, track expenses, and earn rewards. However, if they are not used wisely, they can also lead to debt and stress. What new card holders need is to know the most common errors that would let people enjoy credit cards, while saving money from mistakes. Here are five common mistakes new users of credit cards make and tips on how to prevent them.

1. Only Paying the Minimum Balance 

Probably the biggest mistake that a new cardholder makes is only paying the minimum balance due each month. Even though it is the most probable way of managing a monthly expense, the fact is that it lets one carry over a balance which attracts interest. This might build up to quite huge amounts as time passes by, making what seemed like a small purchase a much larger expense.

2. Overspending in the Chase of Rewards 

Many credit cards entice clients to spend more with rewards on the purchase of cashback, points, and travel miles. New cardholders in quest of these rewards become a danger for overspending, especially if they reach thresholds necessary to earn or obtain any type of bonuses. It is only as valuable when it will neither drive you into debt, nor incite you to buy things you don't need.

How to avoid it: Plan and budget on what you intend to pay through the use of a credit card. Treat the credit card as another unit of cash rather than a reward-earning tool. Necessary expenses can be catered for, but overextension is minimized.

3. Missed or Late Payments

The easiest way to hurt your credit score is by missing or being late with a payment. Many new cardholders do not take late payment seriously, but credit scores are very sensitive to payment history. One missed payment can negatively impact your score for years, and some credit card issuers will charge you additional fees or raise your interest rate as a penalty.

How to Avoid It: Sign up for automatic payments so that the minimum balance is always paid on time, and you never miss a date. Or, if you enjoy making your payments yourself, use calendars and your banking app to remind you. 

4. Not Checking the Credit Card Statement

Your monthly credit card statement is much more than a bill; rather, it summarizes all of your spending habits and can serve as an effective tool for financial awareness. Failure to check the fine print may prompt a reckless expenditure cycle and also prevent early fraudulent activity detection.

Avoid it. Check your credit card statement each month. Look for charges you do not recognize or for mistakes and contact your credit card provider immediately if you find anything suspicious. Many credit card issuers, including those holding the best credit card in Pakistan, allow the easy-to-read statement of account and access to transaction history through their online interfaces, which can help cardholders monitor their expenditures.

5. Applying for Multiple Cards Too Soon

Approval for your first credit card may be exciting, but many new cardholders desire to apply to several cards in a very short span of time. Applying to multiple cards within an extremely short period often hurts the credit score because the hard inquiry appears on your credit report when applying for each card. Multiple cards also increase the possibility of overspending, and one can easily become confused with regard to several deadlines for making payment.

How to Avoid It: Begin with one card and use it responsibly for several months before considering a second one. The history of responsible credit use established with one card will make it much easier to qualify for other cards with better terms the next time around. 

Final Thoughts

And one should avoid these common mistakes in setting up oneself for successful credit management and not falling into the trap of debt. That way, you would make the most from your card when utilizing the services offered by a trustworthy issuer; for example, JS Bank ensures that all services are secure and comfortable. Mandatory features in JS Bank credit cards will make it easier to handle your finances or money, especially during the first phase of being a cardholder.