4 Mistakes people make with credit cards (with interest calculator!)

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Credit cards can be great, and they can be hellish. They can create an opportunity to use them for rewards you otherwise couldn’t afford or wouldn’t pay for, but get on the wrong side of them, and they’ll make your life hell.

Here we have the top 4 mistakes people make when they use credit cards and how you can avoid them!

You only pay the minimum balance & have no plans to change that

Paying the minimum payment as part of your debt snowball is okay. Paying the minimum payment to your credit card with no plan of how you’re going to get it cleared, is not.

Yes it’s tempting to just pay the minimum when times are a little tough, but in the long run? The debt’s going to be around forever pretty much and you’re not going to be able to escape it. Create a budget (post here!) and you’ll be able to find savings elsewhere to get your credit card payment up. You might feel like you’re paying out more each month by upping your payments rather than actually saving money, but once the credit cards gone, you’ll have freed up extra cash that just might be super handy to have, especially if you’re in debt elsewhere as well.

Personally, I’m a big fan of a debt snowball and used it to get out of debt myself. If you’re not ready for that yet, do consider at least upping the minimum payments on your credit card. Use our credit card interest calculator below to see just how much you’re giving the bank, and how much could be going into your own pocket instead.

Using a credit card for everyday items

If you’re using a credit card to pay for everyday items, you’re most likely in need of a budget that works for your family. A credit card really shouldn’t be for everyday purchases (except as part of a rewards scheme, and only if you’re certain you’ve got the will power not to overspend!) since you’re going to wind up spending far more on your everyday items that you need to once interest has been applied.

Don’t fall into a situation where fuel for your car winds up costing 3 times what it should because your credit card company has piled interest on top.

Getting cash out on your credit card – Credit card interest calculator

Cash taken out on credit cards in dangerous. The interest free period is usually 0 days for cash advances, so you’ll start accruing interest straight away. Many UK credit card companies use your monthly payment to pay off card purchases first, leaving the cash advance to sit there collecting interest until the rest of your balance is zeroed.

Rewards are rarely awarded on cash advances either. In short, getting cash on a credit card is a big no no.

Overspending on a credit card just for rewards – Credit card interest calculator

I am not against using fee free cards and paying them off in full to get the rewards they offer. Sometimes it can make financial sense. BUT…..if you find yourself buying things you wouldn’t if you were using cash, just to get the rewards, you’re on dodgy ground. If you are spending ANY money just to boost your rewards, the card is then starting to cost you more than you’re gaining in rewards. The balance you put on your card should match the exact balance of your budget. Don’t spend more because it’s on a card, and if you find yourself starting to do this, cancel the card.

Credit cards can be a trigger for some people and they find themselves not able to control their spending. Better to be debt free with no rewards than in a pile of debt with a load of air miles!

Use our credit card interest calculator to see how much of your minimum credit card repayment is going to the bank this month!

Find out what the interest is on this
months minimum credit card repayment
What is the annual interest rate on your credit card?
What is your current balance?
The amount of interest you will pay this month is …


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2 thoughts on “4 Mistakes people make with credit cards (with interest calculator!)”

  1. 100% agree with these, it’s so easy to go crazy spending on a credit card! Your calculator is a great tool, thank you for sharing!

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