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Credit card warning – you could be among one in 10 who make these crucial mistakes


Eight in ten credit card users admit to making common and easily avoidable mistakes, according to new research.

Withdrawing cash using a credit card (37 percent), only making the minimum repayments (35 percent), and getting close to or reaching your credit limit (34 percent) are the most common credit card mistakes according to research from Compare the Market.

According to this research not paying off your credit card balance in full each month is the most expensive mistake.

Almost one in three (32 percent) have made this error – typically having to pay £194 in interest payments as a result.

The latest figures from UK Finance show outstanding balances on credit card accounts have grown by 9.4 percent over the twelve months to January and 50.5 percent of outstanding balances incurred interest.

Compare the Market found that other common mistakes include not keeping an eye on your credit score (20 percent) and applying for multiple credit cards at once (11 percent).

Applying for multiple credit cards at the same time could lower a borrower’s credit score as they will appear to be a greater risk to lenders.

Almost half of borrowers (49 percent) also didn’t compare providers online when they took out their credit card which may mean they aren’t receiving the best rates or rewards for their circumstances.

One in five (20 percent) borrowers also cancelled a credit card in the past year.

This may be a mistake as the average length of time a borrower has a credit card impacts their credit score, so closing a card could lower their credit score, especially if it’s their oldest card.

However, there are times when borrowers should think about closing a credit card, such as when it has an annual fee that isn’t outweighed by the card’s benefits.

The research also found that 27 percent of credit card users admit they have been late making repayments as 45% have outstanding credit card debt.

This additional debt could be concerning as 70 percent of borrowers admit they don’t know the interest rate (APR) charged by their credit card.

Almost a quarter of borrowers (24 percent) also state that they are using more than half of their existing credit limit. Consistently using a large proportion of available credit can reduce a borrower’s credit score.

Andy Hancock, Money Expert at Compare the Market, said: “It’s important to not get caught out by common mistakes when using a credit card, which could cost you more in fees or interest repayments and have a negative impact on your credit score.

“If you can afford to, it’s always best to pay off your credit card balance in full every month. That way you’ll avoid having to pay interest. At the very least, you must make the minimum monthly payment. Setting up a direct debit payment could help ensure you pay on time.

“If you’re struggling to pay you might be able to reduce repayments, or prevent having to pay more interest, by switching from a standard APR card to a card with an interest-free period.

“You might also be able to save money by switching to a credit card with better rewards or by shifting debt from multiple credit cards to a single card. It’s worthwhile shopping around online and comparing cards to find one that best suits your needs and circumstances.”

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