Credit card mistakes are so common that we often don’t even notice that we’re in a vicious cycle.

However, it is a fact that we must be more attentive to mistakes and successes in our financial life. After all, we may be entering a bottomless and painful hole.

Did you make mistakes using your credit card and don’t know?

It is quite possible because this type of credit still drives many people into debt despite being part of our daily lives.

These are common pitfalls such as late billing, minimum payment, or simple accumulation of installments that compromise your monthly income.

That’s why we’ve prepared a quick guide with the main credit card mistakes you must avoid at all costs.

1. Believing that the limit is part of your income

One of the first credit card mistakes people make is believing that the bank’s limit is a kind of extra income monthly.

When you get a new card, the bank or fintech does a credit analysis to understand your purchasing power. It then determines a limit compatible with your income and consumption habits.

Thus, every time you buy with the card, you get this money from the institution to pay later, with interest.

But many people end up seeing the limit as an extra amount that they can spend monthly, in addition to the salary.

In reality, this money is not yours, as you will have to pay the invoice by due date (and you will use your salary for this).

So, all credit card purchases must be counted within your monthly income, so you don’t end up spending more than you earn.

And remember: don’t get carried away by the total amount of your credit limit, as it may be way above what you can actually spend.

2. Not choosing a suitable card for your profile

Today, there are several card options in the Canadian market. However, many times, you choose the wrong product in an attempt to have more benefits. Therefore, before ordering a card, you need to analyze the requirements (annuity, minimum income, fees, etc.) and assess whether you can afford that card.

It is important to choose a card that suits your consumption pattern

Likewise, make sure your credit card offers what you need. Find out the limit, any annuity exemption policy, and who the issuing bank is. Other points to be analyzed are the number of points offered, the benefits, and the loyalty program.

3. Invoice payment delay

The most obvious mistake turns out to be the most common one many people make.

Delaying your bill payment for a few days may not hurt your name, but it does generate fines, an interest that can be very costly and impact your credit score.

Therefore, be careful not to miss the expiration date.

To remind you to pay your bill, you can schedule an automatic debit so that the amount is automatically debited from your checking account.

4. Having multiple credit cards

If it’s already difficult to control spending on one credit card, imagine several. Even so, people mistake hiring a bunch of cards with different flags.

And worse: many of these cards charge annual fees that make the bill even higher. The most frequent reason for this habit is the desire to have a higher limit when just one card is not enough.

This is a big danger because you will certainly spend more than you should with multiple cards in addition to losing control of the installments.

5. Not tracking the statement

Do you track your credit card statement the same way you track your chequing account?

Many people use credit cards and don’t keep track of their statements. As a result, they pay more to the account than otherwise when they check.

Therefore, ideally, you should check your card statement at least once a week.

So, you have better control over your finances.

6. Spending more than you can afford

Just as it’s a mistake to believe that the card limit is extra income, spending more than you can afford is a problem. The credit card limit is higher than what you earn in many cases. Thus, this credit availability gives a false impression that you can go shopping like there is no tomorrow.

Very careful! Remember that your credit card is not always synonymous with money in the bank, and later the invoice will arrive. Many people abuse installment purchases and lose control of how much they spend using their credit cards. However, these benefits can weigh on your budget.

In conclusion

Using a credit card is certainly a privilege that brings us several benefits. However, to ensure that you can enjoy these benefits, you should avoid the above credit card mistakes at all costs.