How to avoid 7 of the most common credit card mistakes

Thinking about getting a credit card? Or maybe you already have one, and you just want to brush up on the best ways to keep clear of debt?

Ready to make your decision? Compare now. - last updated 20 May 2022

Search promoted credit cards below or do a full Mozo database search. Advertiser disclosure
  • Apply By 31 Jul 2022
    Bendigo Bank Low Rate Credit Card

    0% p.a. on purchases and 0% p.a. on balance transfers for up to 20 months from account opening (Reverts to 11.99% p.a). A balance transfer fee of 2% applies to the balance transferred. Low annual fee of $45.

    Purchase rate
    0% p.a. for 20 months then 11.99% p.a.
    Balance transfer rate
    0% p.a. for 20 months and then 11.99% p.a. (2.00% balance transfer fee)
    Annual fee
    $45
    Rewards program
    -
    Details
  • Apply By 30 Jun 2022
    Westpac Low Rate - Cashback Offer

    Enjoy a super low rate of 13.74% with 55 days interest free plus up to $400 cashback - $100 cashback for each month you spend $1,000 or more on eligible purchases in the first 4 months from card approval. New Cards only. T&C's and exclusions apply.

    Purchase rate
    13.74% p.a.
    Balance transfer rate
    6.99% p.a. for 12 months and then 21.49% p.a. (1.00% balance transfer fee)
    Annual fee
    $59
    Rewards program
    -
    Details
  • Apply By 30 Jun 2022
    St.George Vertigo - Balance Transfer Offer

    0% p.a. for 32 months on balance transfers requested at card application. 0% balance transfer fee applies. Rate then switches to applicable variable cash advance rate. No annual fee for the first year, $55 thereafter. New cards only, Eligibility criteria and T&Cs apply.

    Purchase rate
    13.99% p.a.
    Balance transfer rate
    0% p.a. for 32 months and then 21.49% p.a.
    Annual fee
    $55 $0 in the first year
    Rewards program
    -
    Details
  • NAB Low Rate Card

    0% p.a. interest on balance transfers for the first 32 months, plus a low ongoing purchase rate after that means you can spend with confidence. There's also up to 55 interest free days on purchases to help you manage your budget better.

    Purchase rate
    12.99% p.a.
    Balance transfer rate
    0% p.a. for 32 months and then 21.74% p.a. (0% balance transfer fee)
    Annual fee
    $59 $0 in the first year
    Rewards program
    -
    Details

Well, half the battle is knowing what NOT to do. There are plenty of pitfalls credit card users can fall into that can wind up costing them a bundle - from getting stuck with late fees, to racking up massive interest, right through to avoiding credit cards entirely. 

That’s why we’ve rounded up 7 of the most common credit card mistakes that spenders make - and how to avoid them.

A late payment may not seem like the end of the world, but it can do serious damage. Not only will it add late fees to your bill, but it will drag your credit score down, which can mean you’ll have more trouble applying for loans or credit cards in the future.

You can set up automatic repayments to cover the minimum payment on your credit card bill each month to avoid this - just make sure that there’s always enough money in your bank account to cover it.

Paying the minimum means you’ll be able to avoid late fees - but unless you clear your entire bill each month, you’ll get hit with interest on the balance that carries over. Plus, if you don’t pay off your whole balance, you’ll lose your interest free days for the next month, which only makes the problem worse.

So make sure you’re never spending more in a month than what you can comfortably afford to repay. And when you set up automatic payments, think about setting them up to cover your whole credit card bill, not just the minimum.

No one wants to pay extra fees, so to avoid an overdraft, make sure you’re well within your spending limit when flashing your plastic. This will also help to protect your credit score.

The key here is to use the credit available to you in a responsible way. Maxing out your card makes you look like you’re struggling to cover everyday costs, or living way above your means, which can both be red flags for financial providers.

Ok, so most credit cards these days have pretty tight security measures in place to protect you against fraud, or to make sure no one uses a lost or stolen card to spend all your hard earned cash. But even within these security guidelines, you have a responsibility to minimise the potential damage, which means letting your credit card provider know ASAP. If you don’t, a card provider can hold you responsible for transactions you didn’t make, and you’ll have to foot the bill anyway.

Some credit card users don’t fully understand how to make use of interest free days - which can be a big mistake, since they’re one of the best ways to save money when using your credit card. Every month you’ll have around 44 or 55 days in which to pay off your spends before being hit with interest. But remember, this period begins at the beginning of your bill cycle and not when you make a purchase. So if you splurge with a big spend toward the end of the month, you might only have a week or two to pay it off.

Sometimes, you just need to have cash - like when sharing a bill at a restaurant or picking up your favourite takeout - but using your credit card to get it can quickly get expensive, thanks to cash advance fees, and the fact that you’ll pay interest on it straight away (no interest free days here!) Plus, you’ll be charged interest at the cash advance rate, which is often higher than the regular purchase rate.

A useful alternative is a debit card. Because you’re spending your own money, there’s no fee or interest to pay. Just make sure you use your bank’s ATM network, so you don’t pay an ATM withdrawal fee.

Having a credit can be your first step to building up a good credit history, which can set you up to get approval for things like a home loan later. A credit card can also be a good way to manage your budget, because not only is it a source of spending money until your next paycheck hits, but it can also be useful to keep track of your spending by reviewing your credit card statements.

So rather than avoid plastic altogether, make sure you choose the best credit card for your needs, and then brush up on how to use it responsibly. And remember these seven mistakes and how to avoid them!

Ready to pick up the perfect piece of plastic and start spending and building up your credit history? Head over to our credit card comparison tool to find your ideal match.

^See information about the Mozo Experts Choice Credit Card Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.