Credit cards are no longer just for emergencies or big purchases. Nor are they considered a debt trap. Nowadays, credit cards have several advantages over cash and debit cards. By using your credit card for everyday purchases, you can boost your credit score, pay for your dream vacation, and earn exciting rewards. However, it’s crucial to exercise caution, as a good thing can turn bad if you’re not careful.

We all have spending habits we need to break. But when it comes to credit cards, avoiding them altogether isn’t always necessary. It’s more about knowing how to use them wisely and being mindful of common mistakes that are easy to overlook.

In this article, we will discuss ten common credit card mistakes customers make and solutions on how you can steer clear of them. We’ll also offer tips on choosing the best credit card for your lifestyle to maximize its benefits.


Credit Card Mistake #1: Only Making Minimum Payments

The allure of only paying your monthly minimum can be tempting. However, you do not want to make a habit of maintaining a credit card balance. Only paying the minimum balance on your credit card can quickly lead to an endless cycle of debt.

When you only make a minimum credit card payment, you are not only slowly chipping away at your debt, but you are adding to your debt due to the interest charged on the balance that remains.

And let’s not forget how only paying the minimum payment can affect your credit score.

Credit utilization, which measures the amount of credit you’re using compared to your total credit limit, is a crucial factor in calculating your credit score. When you’re consistently carrying over a high balance, it can negatively impact your creditworthiness.

Another issue with making only the minimum payment is that doing so could lead to a false sense of financial security. You might convince yourself that you’re staying on top of your finances, while in reality, your debt is snowballing.



If you know you won’t be paying your card balance in full every month, the most important thing you can do is use a credit card with a good annual percentage rate (APR). This rate is set by your lender based on your credit score and can be fixed or variable (meaning your rate can go up or down over time depending on market rates) but is almost always expressed as a yearly percentage.

A good APR rate is anything at or below the national average, which is currently around 20%.

Some credit card companies also offer introductory 0% APR. Always take advantage of this offer when possible. However, you should still be aware of your APR after the 0% offer expires and when that rate kicks in.

If you can’t pay the balance in full, you should at least pay more than the minimum each month and make extra payments when possible. Even small additional contributions each month can make a considerable difference in reducing your debt and saving you money on interest.

One way to motivate yourself to pay off your balance each month is to understand the financial impact of only making minimum payments. You can do this by calculating how much interest you will be paying.


How To Calculate Credit Card Interest

Multiply your average daily balance by the monthly interest rate and the number of days in the billing cycle. Add this to your original balance for the total amount owed. For a specific period, you can use this formula: Interest = (Average Daily Balance) x (Monthly Interest Rate) x (Number of Days in Billing Cycle) / 365.25.


Credit Card Mistake #2: Paying Late or Missing Payments

You may be subject to late fees and penalties when you pay your credit card bill after the due date. These charges can quickly add up, creating an unnecessary burden on your budget. Moreover, multiple late payments are reported to credit bureaus, causing a negative impact on your credit score.

Missing payments altogether is even more damaging. Not only will you face late fees and credit score damage, but the credit card company may also increase your interest rate, further compounding your debt burden. In extreme cases, repeated missed payments can send the account to collections, resulting in more severe consequences for your credit history.



Often, it’s not that people don’t have the funds to pay their credit card bill; they simply forget to pay it. To avoid this, consider paying your credit card bill as soon as you receive it. This proactive approach ensures you won’t forget and have peace of mind knowing that your payment is in on time.

If you need to wait closer to the due date to pay your bill, set a reminder or alarm on your phone to alert you of the upcoming due date. You could also enroll in automatic payments to deduct the minimum or full amount from your bank account on the due date.

If you’re facing financial constraints and can’t make the whole payment, make at least the minimum payment to avoid mounting interest, late fees, penalties, and potential credit score damage. Then, work on a plan to catch up on missed or minimum payments as soon as possible.

Another option, if you cannot pay your bill on time, is to reach out to your financial institution. If you have a positive payment history, some credit card companies might be willing to extend your due date or allow you to make modified payments.


Credit Card Mistake #3: Maxing Out Your Credit Card or Using Most of Your Credit Limit

Every credit card comes with a credit limit, the maximum amount of money a lender allows you to charge. This is usually based on what your bank thinks you’ll be able to repay based on the financial information you provide.

You want to avoid maxing out or getting too close to your credit limit because carrying a hefty balance messes with something called your credit utilization ratio. That’s just a fancy way of saying how much of your available credit you use.

Besides your payment history, which makes up 35% of your credit score, the amounts owed on your credit cards account for another 30%. So, if you’re carrying a significant balance (or balances) and getting near to maxing out your credit limit(s), it might signal to lenders that you pose a credit risk.

A maxed-out card can also increase your minimum monthly payment. And if you accidentally go over your credit limit, you will likely be faced with hefty fines.



To dodge this credit card mistake, keep tabs on your balance and credit limits to ensure you’re not going overboard. As a general rule, try not to use more than 30% of your available credit.

If you’re getting too close to your credit limit, consider making multiple payments throughout the month to stay on the safe side. Or, if you find yourself frequently charging close to your limit each month and have no problem paying off your bill, you can call the credit card company and ask for a credit increase.

In fact, strategically requesting a credit limit increase for each of your cards annually (unless your credit card issuer raises your credit line automatically) can be a wise move to optimize your credit rating. However, you don’t want to increase your credit line if it encourages additional spending, resulting in higher balances.


Credit Card Mistake #4: Not Reading Terms and Conditions

A recent survey shows that around 91% of people consent to terms of service without reading them. When it comes to credit cards, not paying attention to fine print can lead to unexpected financial setbacks. Understanding the nitty-gritty details, including your interest rate, penalties, and fees, is crucial for responsible credit card usage.

Here is the information in your credit card terms and conditions you need to take the time to read and understand:


Annual Percentage Rate (APR)

Your Annual Percentage Rate (APR) is the heartbeat of your credit card because it determines the interest rate on your outstanding balances. Not understanding this rate could leave you in the dark about how much interest you’ll be charged each month if you carry a balance.

For example, let’s say you are qualified for a credit card with a 0 percent APR offer. It’s essential to remember that this interest rate is an introductory rate and typically lasts for the initial 12 to 21 months after opening your account. To avoid incurring the regular purchase APR, ensure you pay off your entire balance before the introductory period ends.

Additionally, there is something called a penalty APR. Card issuers may penalize you with an interest rate higher than your quoted APR if you pay your balance late.


Annual Fees

You can open and maintain many types of credit cards for free, but some come with fees just for the privilege of having the card. Overlooking this detail might leave you with an unnecessary expense that doesn’t align with your financial goals.


Late Payment and Missed Payment Fee Amounts

While the goal is to always make a timely payment and never miss a payment, knowing what type of grace period your lender offers and what kind of penalty you face should you fall behind is essential.


Foreign Transaction Fees

If you plan to use your card outside the United States or make purchases online from a merchant based overseas, you need to be aware of foreign transaction fees.

Not all credit cards have these fees, but when they do, they are typically a 1-3% surcharge, which can quickly add up if you make purchases abroad or from a merchant not in the United States.


Balance Transfer Fees

If you have multiple credit cards and hope to consolidate debt from other cards, transferring balances might come with additional costs.



We know it seems daunting to read terms and conditions, but it’s essential for responsible credit card usage. You need to read the fine print to be fully aware of any potential fees, including annual fees, late payment fees, foreign transaction fees, and balance transfer fees.

Don’t be afraid to ask questions if you don’t understand the verbiage in your agreement or if something doesn’t make sense. Reach out to a member of the F&M Bank customer service team with questions. We are happy to help!

Once you have all the information you need, you should weigh these charges against the card’s benefits to ensure it aligns with your financial needs and goals.


Credit Card Mistake #5: Taking Cash Advances

When you’re in a pinch and need quick cash, a cash advance from your credit card might seem like an easy solution. However, taking advantage of this credit card perk should be a last resort because cash advances typically come with high costs and fees.

First, you will have to pay a cash advance fee. This is money out of your pocket just to take the money out. The amount might be flat or a percentage of your transaction amount (typically, whichever is higher.)

Additionally, as soon as you withdraw the money, interest starts to accrue. Unlike the grace period offered on credit card purchases, where you can avoid interest by paying your balance in full by the due date, cash advances start accruing interest immediately. This means that even if you pay off the cash advance the next day, you’ll still be hit with interest charges.

What’s more, cash advances usually carry a higher interest rate than regular purchases and do not qualify for any rewards or points offered by your credit card.



Cash advances should be a last resort. Before taking out a cash advance, you should look for more affordable options to meet your short-term cash needs. Consider exploring alternatives like personal loans or targeted offers from credit card issuers.

Some issuers offer attractive deals that convert your available credit on the card into a more affordable installment loan directly deposited into your bank account. The best part is that these options often require no loan application or credit check, making it a smoother and less burdensome process.


Credit Card Mistake #6: Closing Your Card Too Soon

It’s a common misconception that closing a credit card will automatically lead to financial improvement. While it may seem like the right move and certainly could be if you can’t use your card responsibly, closing your card prematurely can have negative credit score consequences.

A crucial factor affecting your credit score is the average time you’ve had credit. When you close a credit card, it can impact the average length of your credit history. Closing a credit card, especially your oldest one, is not advisable.



Before closing your credit card, take a moment to weigh the pros and cons. If the card doesn’t have an annual fee and you’re not tempted to overspend, keeping the account open would be wise to support a positive credit history. Keeping a credit card open helps to maintain a longer credit history, which can positively impact your credit score.

Yes, this is a wise choice, even if you don’t plan to use the card very much. By not using the credit card, your credit utilization will likely be low, which can positively affect your credit score.

If your card does have an annual fee, instead of closing your card, ask your credit card issuer if you can switch to a no-annual-fee option that better suits your financial needs.


Credit Card Mistake #7 Not Reviewing Your Statement

One common credit card mistake many people make is not thoroughly reviewing their statements. By not taking the time to review your statement, you might miss billing errors, double charges, or even unrecognized transactions, leaving you vulnerable to potential financial losses or inaccuracies in your credit history.

In today’s digital age, credit card fraud is a significant concern. Staying vigilant with your credit card statements is more crucial than ever. Shockingly, the number of U.S. adults affected by credit card fraud has already reached 127 million, with the threat expected to increase as cybercriminals continuously refine their tactics.

By regularly reviewing your credit card statements and promptly reporting any suspicious transactions, you can protect your finances and contribute to a safer credit card ecosystem for all users.

Moreover, reviewing your statement helps you gain better insights into your spending habits and identify areas where you might need to adjust your budget. It also allows you to track your credit card rewards or cashback earnings, ensuring you benefit from your card’s features.



At F&M Bank, you can receive a paper statement, or opt for an eStatement. Whatever method you choose, always make it a habit to carefully review your credit card statements each month.

Take the time to go through each transaction and ensure they are all legitimate. Check for any discrepancies or unfamiliar charges, and if you spot any errors, promptly contact your credit card issuer to resolve the issue.

Additionally, you should sign up for phone, text, or email alerts that notify you of suspicious activity. These alerts are free and offer a secondary layer of protection against fraud.


Credit Card Mistake #8 Opening Too Many Credit Card Accounts

Each credit card application triggers a hard inquiry on your credit report, which may cause a slight dip in your credit score. While one inquiry won’t significantly impact your credit score, multiple inquiries in a short time frame can add up and raise concerns for lenders.

Excessive credit card applications can be a red flag, suggesting that you are seeking access to multiple lines of credit due to financial distress. This perception could raise concerns among lenders and potentially affect your ability to secure future loans for significant purchases, such as a home or car.



Avoid the temptation to apply for multiple cards and instead prioritize the ones that genuinely offer value to your financial situation. Before applying for a new credit card, carefully consider your needs and whether the card’s rewards and benefits align with your lifestyle.

You can also gauge your eligibility for a credit card without impacting your credit score by taking advantage of pre-qualification forms offered by many credit card issuers. These forms allow you to check whether you qualify for a card before submitting a formal application.

If you must apply for more than one credit card, space out your applications over time and avoid applying for multiple cards within a short period. A general guideline is to wait at least 90 days between credit card applications. For an even more cautious approach, waiting at least six months allows more time for the negative impacts of each hard inquiry to fade from your credit report.


Credit Card Mistake # 9: Chasing Rewards

Studies show that consumers tend to spend more when using a credit card, especially one with enticing rewards. We get it; who doesn’t want to earn cash back or travel miles simply because you swiped your credit card?

While earning rewards for your day-to-day spending is great, the desire to acquire these perks might lead you to put more on your credit card than you normally would or should.



Though it feels rewarding to earn points or cash back, if you don’t have it, don’t spend it just to gain perks. Overspending can negatively impact your financial well-being. It can affect your savings or available cash, and in extreme cases, it could lead to debt if you cannot pay off the balance in full.

Use rewards wisely and stay true to your budget and spending plan. Refrain from letting the pursuit of rewards lead you to overspend or buy things you don’t need.


Credit Card Mistake #10: Not Picking The Right Credit Card

Speaking of rewards, another mistake people make when choosing a credit card is not selecting a card that provides them with perks they will use and benefit from.

For example, if earning cash rewards is a priority, many cash back cards are tailored to different spending habits. The same goes for travel rewards. Some travel cards have higher annual fees but offer luxurious perks, while others are more affordable and cater to casual travelers.

However, the right credit card choice goes beyond just rewards. It’s essential to consider other factors that align with your financial goals and lifestyle. Not all credit cards are created equal, each serving different financial needs and objectives.



Signing up for a credit card is a financial commitment. It is vital that you find the right match for your needs. For instance, if you only plan to use a credit card in the case of an emergency, choosing a credit card with an annual fee probably isn’t wise.

In contrast, if you plan to use your credit card more like a debit card (using it for most of your purchases and then paying off the balance monthly), the perks and rewards might outweigh a small annual fee. Or, if you’re new to credit, you could even explore student cards (if eligible), or secured credit cards might be beneficial.

Understanding why you’re getting a credit card, knowing all of your options, and conducting thorough research is of utmost importance.


Discover How F&M Bank Can Help You Build a Brighter Financial Future with the Right Credit Card in Your Wallet

Credit cards can be valuable financial tools when used responsibly. They offer convenience, security, rewards, and the opportunity to build a positive credit history. By avoiding common mistakes such as only making minimum payments, paying late, or overlooking the fine print, you can make the most of your credit card experience.

At F&M Bank of Tennessee and Kentucky, we understand the importance of finding the right credit card that aligns with your unique needs and goals. Our diverse credit card options provide flexibility and tailored benefits to suit various lifestyles.

We invite you to visit our website’s credit card application section or stop by one of our branches to explore the credit cards we offer. Our experienced team is here to guide you in making informed decisions and ensure you make the most of your credit card experience.