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4 credit card mistakes to avoid

Jan. 14, 2021
5 min read
Woman withdrawing money from ATM
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Credit cards have the potential to be an incredibly valuable financial tool you can use to hit your goals. Whether you want to save money on your monthly bills, earn rewards for free travel, upgrade your travel experience or a mix of all three, credit cards can help you get there when used responsibly. However, earning points and miles is less valuable if you're losing money in interest or hurting your credit score. As you pay with plastic, make sure you steer clear of these four major mistakes.

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1. Using your credit card at an ATM

While I recommend using your credit card when you're traveling wherever possible, cash is still king in many destinations around the world. That means you may find yourself in need of pulling money out of an ATM while abroad. While you can use your credit card at most ATMs, there are two major drawbacks — transaction fees and higher annual percentage rates.

For example, let’s say you make a cash advance withdrawal of $500. The issuer will likely charge you a transaction fee — likely $10 or 5% of the amount of the withdrawal, whichever is greater. So, before the interest even kicks in, you’re already paying an additional $25. Some cards will reimburse you for these fees, so make sure to double-check whether this benefit is available to you. Then you'll also have to pay interest on top of those fees. While APRs vary based on the prime rate, which card you have and your credit score, it's not uncommon to see cash advance APRs near 25%.

Very rarely do we recommend using a debit card rather than a credit card, but pulling money out of an ATM is one such case where it might make sense to go that route — especially if you have a debit card that doesn't charge (or reimburses) out-of-network ATM fees.

Related: 7 ways to save on overseas ATM withdrawals

(Photo by Vera Arsic/EyeEm/Getty Images)
Using your cards at ATMs abroad could cost you. (Photo by Vera Arsic/EyeEm/Getty Images)

2. Only making minimum payments each month

On most credit cards, you don't have to pay your entire bill at the end of each month. Instead, you only have a minimum payment that's a portion of your bill. But if you’re regularly paying the minimum amount and carrying a big balance, you'll end up paying more in interest. As that debt amount continues to climb, your credit score will move in the opposite direction. Why? Your debt-to-credit utilization ratio will suffer, which is one of the largest factors in determining your score.

Sometimes things happen and bills can't be paid in full. Or maybe you're taking advantage of a 0% APR offer that lets you space out a large purchase over time. But your goal should always pay your full bill each month, especially since this is one of TPG's 10 commandments for credit cards.

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Related: Everything you need to know about credit card debt

3. Prioritizing earning rewards over paying down debt

An Austrian Airlines business class cabin. (Photo by Andrew Kunesh/The Points Guy)

At TPG, we know that credit card rewards can deliver some amazing benefits, including a premium class ticket to explore the world, free nights at your favorite hotels and cash-back opportunities for everyday spending. However, those benefits aren’t worth anything if you’re burdening yourself by racking up debt and having to pay steep interest rates. As you watch the total number of reward points tick upward each month, pay attention to a more important number: your balance. If you’re carrying a big balance, you’ll end up losing more money in interest payments than you gain in rewards value.

Related: 6 simple rules to stay out of credit card debt

4. Not keeping an eye on your accounts

With mobile banking apps and online banking tools, keeping an eye on your transactions has never been easier, and with credit card fraud on the rise, it’s never been more important. Rather than waiting until the end of the month to review a lengthy list of what you spent, I recommend checking in on your credit card activity on a daily (or at least weekly) basis. If you don’t recognize a charge, you can alert your bank and put an immediate stop to any malicious attempts to use your card.

Related: How to prevent credit card fraud

Close up female arm sending message on the phone while wearing contemporary watch and rings
Online banking tools can help you stay on top of your finances. (Photo by YakobchukOlena/Getty Images)

Bottom line

Credit cards have opened the door for me to experience so many things I otherwise would have missed out on — I've flown to Croatia on points and I've used cash back to save money on other expenses. But credit cards can turn into a burden on your finances when you don't use them to your benefit. Make sure you're maximizing your credit cards by avoiding these mistakes.

Featured image by Getty Images/Cultura RF
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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Our points-obsessed staff uses a plethora of credit cards on a daily basis. If anyone on our team wouldn’t recommend it to a friend or a family member, we wouldn’t recommend it on The Points Guy either. Our opinions are our own, and have not been reviewed, approved, or endorsed by our advertising partners.
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TPG featured card

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TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards

2 - 10X points
10XEarn unlimited 10X miles on hotels and rental cars booked through Capital One Travel
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Intro offer

75,000 bonus miles
Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel

Annual Fee

$395

Recommended Credit

740-850
Excellent
Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

Why We Chose It

The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

Pros

  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
  • Up to $300 in annual travel statement credits toward bookings make through Capital One Travel.
  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,400+ lounges, including Capital One Lounges and our Partner Lounge Network
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023
Best card for premium perks while traveling
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards Rate

10XEarn unlimited 10X miles on hotels and rental cars booked through Capital One Travel
5X5X miles on flights booked through Capital One Travel.
2X2 Miles per dollar on every purchase, every day
  • Intro Offer
    Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel

    75,000 bonus miles
  • Annual Fee

    $395
  • Recommended Credit
    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    740-850
    Excellent

Why We Chose It

The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

Pros

  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
  • Up to $300 in annual travel statement credits toward bookings make through Capital One Travel.
  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,400+ lounges, including Capital One Lounges and our Partner Lounge Network
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023