6 Major Credit Card Mistakes

Only sending in the minimum monthly payment means paying your bill could take ages, and the interest rates (10-29%) that credit card companies charge will keep your bill growing every month. Instead, send as large of a payment as you can afford. Whenever possible, try to reduce your spending in other areas to focus on paying off your credit card debt. This will help keep compound interest from working against you.

Your monthly necessities should be paid with your monthly income. Keeping required purchases like groceries and utility bills off of your credit card is a major step toward getting your spending under control. A $3 gallon of milk purchased with a credit card can quickly turn into a $30 gallon of milk if you don't pay off the balance at the end of the month. There's no need to incur interest charges on necessary items that you should be covering with your paycheck.

As long as the credit card balance is paid in full and on time each month, there is nothing wrong with using credit cards to earn rewards. But, if you can't pay off the money you spent during the month, the rewards earned from credit cards are often worth far less than the interest accrued. Credit card reward schemes often come out to a 2% bonus. Because the amount of interest charged on outstanding account balances exceeds the bonus, incurring double-digit interest amounts to a loss.

Credit card companies often sends checks to cardholders in the mail. These checks are cash advances. Taking a cash advance will cause you to accrue interest the minute the advance is taken - unlike with regular credit card purchases, there is often no grace period. An automatic fee of 2-4% is also charged on the amount of the cash advance in addition to a higher interest rate compared to your regular credit card balance.

Medical bills can be overwhelmingly expensive, especially if you're uninsured. If you're having trouble paying your medical bills, you should attempt to negotiate an agreement with your medical care provider. Don't add to your bills - and your stress - by tacking exorbitant credit card interest rates onto your medical expenses. Also consider going over your bills with a fine-toothed comb to make sure they are accurate and that you understand all of the charges.

Cleaning up your credit card debt takes time and self control, but the steps outlined here aren't difficult. There's no reason that credit cards can't be a helpful, convenient tool - assuming you can learn to use them sensibly and responsibly. For more credit card tips, read:

- How To Dispute A Credit Card Charge
- How Credit Cards Affect Your Credit Rating
- Understanding Credit Card Interest