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If chosen with care, credit cards offer undeniable non-taxable rewards…

In the form of points, miles, cash back, travel insurance, extended warranties, and other great perks.

Not to mention, you get to build your credit score in the process. And get better protection from thieves in this age of illegal hacking.

But be warned: credit cards are a double edged sword. They can be a dangerous tool if not handled responsibly.

Here are 12 critical credit card mistakes we should all avoid when choosing and using our credit cards:

Mistake #1: Treat it like extra income.

It might be tempting to think that a credit card is your only resort when you see $0 in our bank account…

But then, that 20-30% interest rate rears its ugly head the minute you’re late in paying that borrowed money in full.

Cash advances are an even more dangerous proposition. With those, the interest starts racking up the moment you make the withdrawal. No grace period. No thanks.

With normal purchases, at least you have 21-30 days to pay them off before you get charged a penny.

Mistake #2: Take the first credit card that comes along.

We’ve all done it. One way or another: we take the first thing that comes our way. Even when we could have done (so much) better.

Your bank is more than happy to offer you a credit card that suits them more than it suits you. Be sure you won’t be maximizing your rewards, your perks, and your insurance coverage if you let them slide any old card into your wallet.

Thing is, you don’t have to do that anymore. Because when it comes to credit cards, you get to choose what’s most important.

Pick something that fits your life, spending habits, and reward goals.

Mistake #3: Only pay the minimum payment.

This calls for an emergency intervention. Credit card debt isn’t something anyone should have to carry around. And focusing solely on the minimum payment is like a slow and painful death.

When it comes to debt, we need to be quick and ruthless. RIP that band-aid off as FAST as you can. A take no prisoners approach, if you will.

But how? First find out:

  • How much balance do you carry? And…
  • What is your current interest rate?

Multiply these two numbers and this is how much you’re paying yearly. Yikes!

So let’s shrink that interest rate. For example, with a balance of $8K at 20% interest…

The , at 4.20% annual interest rate (stellar credit required), you’d save $1,264 yearly even after paying the annual fee.

Mistake #4: Ignore monthly statements.

…And paying late.

No worries, no judgment here. Because every month I’m tempted to ignore my calendar reminders to check my statements.

But what keeps me going? The thought of calling customer service, being put on hold for hours, getting passed around from one CSR to the next, so I can hopefully get a refund of the interest amount I paid for missing the deadline.

Some people think this is fun. And to some extent, getting your money back IS fun. But being put on hold, passed around and having to repeat myself 10x really spoils the fun of it.

So set those calendar reminders twice a month. Check our monthly statement. Pay on time. End of story.

Not only that. But the exercise of going through your statements lets you catch any fraudulent charges – so you can report them ASAP and get refunded.

Mistake #5: Neglect the details.

Ah yes. The fine print. Maybe it’s just me, but…

I like me my font BIG.

(Yo, corps: If something’s important for me as a consumer to know about, make the font bigger. And make it easy for me to read your stuff. Unless you don’t want me to read it? If so, then all kinds of warning bells go off in my head.)

Anyhoo. We can’t depend on anyone else to look out for us now can we?

So, zoom your browser to 200% on that fine print and get ALL the info. It’s much better when you understand what you’re getting yourself into.

Mistake #6: Too many credit cards hanging around.

Oh yes. Juggling multiple credit cards.

I know for me, I can only properly manage 3 cards in my wallet:

  • Amazon Chase Visa for work related purchases
  • MBNA Smart Cash Platinum Plus Mastercard for groceries and gas
  • MBNA Rewards World Elite Mastercard for everything else

I know some can responsibly manage more, and others less. The key is knowing your limit and what you can responsibly handle.

Having more cards to maximize your rewards and get big sign up bonuses can pay off big if you’re a detailed person that can keep track of it all. If not, it’s OK to pass up a few rewards to simplify and stay in control.

If you have too many cards with high limits, you can even look like a risk to lenders. Getting that mortgage or car loan could be that much harder, even if you have a good credit score.

Related: Credit Card Churning In Canada: Lucrative Hobby Or Risky Business?

Mistake #7: Having a crazy credit limit.

Raise your hand if you’ve received a letter (or email) with an offer to increase your credit limit.

Did you say yes? Ignore? Say no? Or think long and hard about it?

Depending on the card and your score, your credit limit can go up to $25,000 – or even higher in some cases.

Question is, how much can we spend and pay in full every month? Knowing and sticking with that number keeps us out of trouble.

Keeping a limit that is between 2-3x higher than what you spend in a month is good for your credit score and allows for unusually large purchases. Any higher than that and you’re starting to play with fire.

If a card gives you a crazy high limit, nothing’s stopping you from calling and requesting something more reasonable.

Mistake #8: Use debit instead of credit card.

So, why not get rewarded for spending on something you’d buy anyway?

Aside from the obvious rewards, there’s also:

  • Fraud protection – you have 0 liability for fraudulent charges, including a lost or stolen card, as long as you report problems reasonably quickly. Plus, unlike debit, your money in the bank stays in the bank.
  • Healthy credit score – as long as you pay your balance full each month, then using a credit card can help you build a healthy credit score overtime.
  • Free insurance – one of the credit cards with the best insurance coverage has 14 types of coverage included – including purchase protection, travel accident, emergency medical, trip cancellation, and rental car theft and damage, just to name a few.
  • Amazing perks – top cards come with a whole slew of perks – things like personal concierge service, travel discounts, airport lounge access, roadside assistance, upgraded status in hotel or airline programs, special access to events and concerts, and much more.

Now, there’s obviously legit reasons for debit, like if you can’t commit to paying off your balance every month and if you know you’d be tempted to spend more money (see Mistake #1)…

But if these two things don’t apply? Then by all means.

Mistake #9: You forget about your points.

Guilty, guilty, guilty. I’m completely owning this mistake.

I was an avid Shoppers Optimum collector…until I realized I let my points sit there, collecting dust.

I finally transferred my points to my partner who collects and even better – redeems – them points with gusto. So now we manage just one Optimum card: his.

And so my bias is for cash back cards. Because cash, I have no problem collecting or using.

Mistake #10: Ignore your free insurance coverage.

You almost need a list. A little cheat sheet you carry for the list of insurance coverage included with your card that you can check from time to time.

That extended warranty and purchase protection coverage alone can add in big savings when that new thing-a-ma-jig we bought 1 year and 1 day ago breaks. One time my partner used it to repair our clothes dryer to the tune of $350.

And some cards come with a long list, so it’s an important factor to consider when choosing your credit card.

Mistake #11: You pay an annual fee, when you don’t need to.

Often paying an annual fee IS worth it…but sometimes it just isn’t. You need to know the difference.

How do you know?

Our basic rule of thumb is if you spend less than $1.2K monthly on your credit card, then ponying up an annual fee likely isn’t worth it.

Pro tip: Our calculator lets you enter your total monthly spend (or break it down by category) and calculates your net rewards in real dollars after all fees are paid. That way you’ll know for sure if paying the annual fee is worth it.

Mistake #12: You DON’T pony up the annual fee when you need to.

Conversely, if your monthly spend is more than $1.2K monthly, then it may be time consider a card with a reasonable annual fee.

You’ll likely get do the same or even better with your rewards after paying the fee AND get a lot more insurance coverage and perks as gravy.

The bottom line

Now that you know to avoid these 12 credit card mistakes, you can make sure that double-edged sword always cuts for you instead of against you.

Even if you’re in the know, it’s easy to slip and make one of these mistakes.

So remember to refresh yourself often so you’ll always be getting max benefit from your credit card.