Getting a credit card is a huge financial responsibility. While it may not seem like much, that little piece of plastic has the potential to seriously derail your financial future.

Regularly using a credit card can have many positive benefits, such as improving your credit score and getting your better deals on loans. However, when used incorrectly, credit cards can accumulate debt that stays with you for years to come. It is important to be aware of common credit card mistakes so that you can avoid financial distress and begin building a solid credit score.

Making Minimum Monthly Payments

One of the biggest dangers of getting a credit card is that you can easily find yourself in debt if you’re not careful. An easy way to do this is by making minimum monthly payments.

While only paying the minimum on your credit card balance won’t hurt your FICO score, you could end up having to pay huge sums of money in interest. Paying two-percent interest may not seem like a lot at first, but it can quickly add up. In addition, making minimum payments will significantly increase the amount of time it takes you to pay off your credit card balance. Depending on how much debt you procure, it could take years and thousands of dollars to finally pay off your card—in addition to all the interest you would gain during that time.

Solution: You should always pay the maximum amount on your card each month. This will require you to budget and practice responsible spending habits. In doing so, you won’t ever have to worry about paying interest and will give your credit score a serious boost.

Missing Credit Card Payments

Forgetting or failing to make a credit card payment can critically harm your credit score. Since payment history makes up 35 percent of your FICO score, missing just one can cause a substantial 100-point drop. This missed payment will stay on your credit report seven years after the date of the first delinquency. In addition, you will receive a late payment charge which is likely to be higher than the minimum amount they required you to pay for that month. Depending on your payment history, late fees typically range from $25 to $38.

These repercussions will begin if one of your payments goes unpaid for 30 days. Additional consequences will occur if you ignore the payment for even longer. For example, if a late payment goes unpaid for more than 60 days, your credit card issuer may choose to increase your interest rate to the highest penalty rate. This will make it even harder to pay off your debt and decreases your chances of getting good terms on future loans and credit accounts.

Solution: To avoid these repercussions, be aware of the due date on your account statement. In addition, you should make payments as early as possible instead of waiting until the last minute when you could easily forget. To ensure that you always pay your card on time, you can set up an automatic payment through your bank. If you choose to do this, make sure that the time and date of the payment are accurate.

Prioritizing Rewards Over Interest

Attractive rewards such as large cash-back bonuses and free airline miles can be tempting, but they shouldn’t be your top priority when choosing a credit card. The most important feature to take into consideration is the card’s interest rate. While enticing rewards distract many new credit card owners, paying off high-interest rates costs much more than any cash back bonus would provide. For example, the national average APR for rewards credit cards is 17.67 percent, which is much larger than the 5 percent bonus you could receive. In addition, cards that offer the best rewards often have the highest interest rates and getting approval is much harder. As a result, they could deny your request which would put a dent in your credit score.

Solution: You should always be aware of the terms of your card so that you’re not hit with unexpected interest rates down the road. Before going to the bank, conduct research on a variety of credit card options so that you have plenty of time think through your decision and weigh the pros and cons. Make sure that you have a good understanding of how credit card interest works before you make a decision, and contact your credit card lender if you have any questions.

Applying For too Many

Every time you apply for a credit card, companies perform a hard inquiry on your credit account which causes your credit score to drop slightly. While a single inquiry will not have much of an impact on your FICO score, applying for multiple cards at a time will start to make an impact. In addition, multiple inquiries can cause lenders to get suspicious about why so many companies are looking into your credit account. As a result, they could start declining your requests, which will cause your score to drop further.

Solution: According to the spokeswoman for Money Management International, Joanne Kerstetter, you should only apply for one credit card at a time and only when necessary.

'Stop and think: do you really need another credit card?' Kerstetter said. 'The more credit cards you have, the better chance you have of getting deeper in debt.'

If you don’t have much credit experience, it is a good idea to start with only one card. This makes it easy to keep track of your payments because all your credit information will be in one place.

Avoiding these common credit card mistakes will help you stay out of debt, build your credit score, and increase your chances of getting good terms on loans.

However, if you’ve made these mistakes in the past and now find yourself unable to get a loan, Cash 1 can help. We offer several loan options, including auto registration loans in Phoenix and Las Vegas, for people who have less-than-perfect credit. Applying is quick, easy, and you can do it over the phone or online.