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3 Big Credit Card Mistakes That I'll Never Make Again

A nervous young woman biting her fingernail while sitting in her kitchen with her phone and laptop.

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Credit cards are a great tool, if used wisely. They can help you earn rewards and build credit.

Unfortunately, not everyone uses credit cards the right way. In fact, when I was a young college student, I made a few major mistakes with my cards that haunted me for years to come. After seeing the consequences of my poor financial choices post-graduation, I know I'll never again make these three big errors when it comes to managing my cards.

1. Missing a payment

The single biggest mistake I made when it came to my credit cards was missing a payment. I thought I'd sent in the money, but actually didn't -- and didn't find out until my next statement came.

I was hit with a late fee and triggered a penalty interest rate. Worse, I had a black mark on my credit score for years. When I decided to buy my first car and secure my first mortgage loan, that late payment was still there to haunt me. It meant paying more for my loans than I otherwise would have.

Now, I make absolutely sure all my payments are sent in on time. In fact, I've automated them. The money is taken right out of my bank account before the payment is due.

I also now know that, in many cases, if you're a good customer and you make a mistake, you can call creditors and they're often willing to work with you. I could have simply contacted the credit card company right after that missed payment and let them know it was in error. If I had, they might have decided not to report the payment as late. I could have avoided years of regret by correcting that single error.

2. Opening too many credit cards

One reason I missed that payment was because I was managing too many credit cards at one time. When I was in college, the CARD Act that helps protect young people from abusive lending was not yet in effect. Creditors made it really easy for income-challenged students to secure credit.

I opened up several cards offered by companies that were visiting my college campus and exchanging free swag for signups. In addition, I got a whole bunch of store credit cards when offered a discount for doing so at checkout. I think I had about 15 credit cards at one time, all of which I'd applied for in a two-year period.

This was too many inquiries on my credit report, which dragged my score down. And it was too many cards to keep track of responsibly.

3. Closing old cards I was no longer using

Once I realized I'd missed a payment and that my multiple credit cards were hurting me, I thought I could solve the problem by closing old credit cards. Of course, this only made things worse. I shortened the average age of my credit history. Also, by losing the lines of credit on those closed cards, I made my credit utilization ratio worse.

Many of those old cards could potentially have still been listed on my credit report to this day, decades later. This would have resulted in a much older average age of account. If I hadn't closed those cards, I could have earned a higher credit score sooner.

Of course, I simply didn't know that at the time. A little credit card knowledge can go a long way, especially if you want to earn a high credit score.

Our credit card expert uses this card, and it could earn you $1,148 (seriously)

As long as you pay them off each month, credit cards are a no-brainer for savvy Americans. They protect against fraud far better than debit cards, help raise your credit score, and can put hundreds (or thousands!) of dollars in rewards back in your pocket each year.

But with so many cards out there, you need to choose wisely. This top-rated card offers the ability to pay 0% interest on purchases until late 2021, has some of the most generous cash back rewards we’ve ever seen (up to 5%!), and somehow still sports a $0 annual fee.

That’s why our expert – who has reviewed hundreds of cards – signed up for this one personally. Click here to get free access to our expert’s top pick.

The Motley Fool owns and recommends MasterCard and Visa, and recommends American Express. We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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