7 Things You Should NEVER do With Your Credit Card

if you have a credit card then you have a great tool to build your credit score and credit history using it the wrong way can be very costly in this video I'll talk about the 7 things you should never do with a credit card making any of these credit card mistakes could cost you money and precious credit score points hey guys my name is Ramy and welcome to points pointers my goal for this channel is to help you earn and redeem as many points as possible to upgrade your travels for little to no money so if you're interested in learning all the tips and tricks for travel hacking and award travel and I mean who isn't then please consider subscribing to this channel also you can get my free 10 step beginner's guide for award travel in the description below the first thing you want to avoid is making cash advance purchases on your credit card this means using your credit card at an ATM machine to take out cash this is terrible because you'll automatically be charged a fee anywhere between three to five percent of the amount of money you take out and on top of that the interest charged on such a purchase can be between 19 to 25 percent all these charges are definitely not worth it the second big mistake you need to avoid is missing a payment when you miss a payment not only will you get slammed with fees and interest charges you'll also lose a bunch of points on your credit score that's why I always recommend you pay your credit card bills in full each month but if for whatever reason you're unable to do that at the moment then please please make sure you at the very least pay the minimum payment on time if not early number three is maxing out your credit cards this is very bad practice especially if you have a short credit history or you have a short relationship with the bank that issued you a credit card in order to maintain a healthy credit score you want to always keep the amount owed less than 30 percent of the amount of credit line you have so if you have one card with a limit of $1,000 try your best to never put more than 300 dollars of spend on that card each billing period if you have higher credit limits on one or more credit cards then I recommend keeping the utilization percentage below 10% the less you owe the better your credit score is number four is a pretty common mistake that people new to reward cards tend to make and that is overspending to earn rewards you keep telling yourself oh let me buy this let me buy that and making the excuse of Wow I'll be earning a ton of valuable points on these purchases but if you make a habit of this and then not being able to pay your bills in full and on time then you start carrying a balance that balance will be slammed with large interest charges that will definitely outweigh any sort of value you can get from your points so never buy something with your credit card that you can't afford only buy stuff that you have the money for so when the bill comes you can pay it in full and on time number five is closing old cards when you close a credit card account you lose the credit limit you had on that card and this will automatically raise your utilization percentage that I explained in point number three so if you have an old card that doesn't have an annual fee I highly recommend you keep it open number six is forgetting about an old account this is a mistake that my wife actually fell for and it cost her about 70 points on her credit score but thankfully after a couple of phone calls over a few weeks it got resolved my wife had bought a pair of shoes from Macy's that she used a discount coupon on and in order to use that coupon she had to pay for the shoes with her Macy's credit card now she also used a gift card on the purchase and the total amount charged on her Macy's card was like twelve dollars or something like that so she doesn't have an online account for that card because we never really use it and we never got a bill for it in the mail so we totally forgot about it thankfully I had signed her up for Credit Karma and since she missed the payment for over sixty days she got an email from Credit Karma saying hey your credit score dropped significantly log in to see what happened long story long she had to call Macy's to pay for the bill over the phone and she told the phone rep that since she never received the bill and never missed a payment before to make sure to report to the credit bureaus and reverse the payment delinquency and sure enough within a couple of weeks we actually received a letter in the mail from Macy's confirming that they reached out to the credit bureaus to correct the situation and her credit score shot back up to where it was number 7 is using your credit cards to pay for your mortgage college tuition or utilities most likely you won't be allowed to pay for such expenses with a credit card but you can do that through a third party or actually some utility companies allow you to use credit cards but in both cases you're most likely going to be charged a fee for such purchases on top of your regular payment now the fee can be 3 percent or higher which is not worth it and will offset any rewards you earn when you make the payment and it will also end up costing you more money anyway the only time I recommend paying for these kind of bills with a credit card is when you're trying to meet a minimum spend requirement on a new credit card you got where you have to spend you know something between 3000 or 4000 dollars in the first three months then it becomes worth it in order to meet that spend that's it for the 7 things you should never do the credit card let me know in the comments if you have any questions and what other mistakes do you think people should avoid making with their credit cards thank you guys for watching and if this is your first time here I would love to have you subscribe because every week I'm publishing videos that will help you earn a ton of credit card points and frequent flier miles that will enable you to travel the world for little to no money