Avoid these 5 Credit Card Mistakes in 2023

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Published by GreenSprout Experts | 9/12/22

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It is almost the end of 2022 and credit card APRs have hit record highs in recent months. As we transition into 2023, it is important to make sure that you are positioning yourself to save the most money while using your cards, and avoid getting hit with higher fees.

Try Not to Carry a Balance

This might seem like a common sense rule, but many credit card users still carry a balance on cards that they could actually afford to pay off. This is a primary source of income for the card issuing company.

With the current high APRs, it is essential that you pay off your balance in full every month if you can afford to do so. This might mean tightening up your monthly budget around other items, but it will help you avoid wasting money on interest charges.

Don't Exceed 30% of Your Credit Limit

Unlike the above example, if you aren't able to completely pay off your credit card each month, it is important to at least keep your balance below 30% of your credit limit.

Experts generally agree that going above 30% will have a negative impact on your credit utilization ratio, and therefore on your credit score. Staying under 30% will help any future borrowing you might need to make, whether it be a home, auto or personal loan.

Choose Your Intro Offers Carefully

Introductory offers are usually the most valuable offers that a card issuer provides. If you are applying for a new card, make sure to consider how the introductory offer can benefit your specific situation.

For example, if you quality for a card with 0% introductory APR, it could be incredibly helpful using it to transfer a balance from a card with a high APR in order to save on interest. Be sure to check the rules for each card to make sure you can use it for the intended purpose.

Don't Be Late

This might be the simplest tip, but it always needs reiterating. If you carry a balance, make sure you pay on time to avoid late fees. Setting up an automatic payment with your credit card company or via your bank is a great way to avoid late fees.

Check if your card has an annual fee (most do) or monthly fee, and calculate whether that fee is worthwhile compared to the benefits you get from using that card. It might be beneficial to change the card you use if the benefits do not outweigh the fees.

Use the Right Card at the Right Time

If you know that you are going to be carrying a balance due to your purchase, you should prioritize using a card with low or 0% APR to minimize your interest charges while you pay it off.

On the other hand, if you can afford to pay off your credit card in full before the end of the month, then it would benefit you more to use a card with high rewards such as travel or cash back bonuses.

If you are traveling abroad, try to use a card that has no overseas transaction fees.

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