5 Bad credit card habits you need to break

woman with credit card trying to form good habits

Once you’ve got a credit card (or multiple credit cards, as may be the case) it can become easy to fall into a pattern of bad habits. With potential for bad credit card card habits to have a long-term impact on your credit score and your ability to borrow in the future. To keep your future finances looking sweet, let’s break those bad habits now!

Below are five common bad habits that can have you slipping into credit card debt – and our tips on how to kick them.

Only making the minimum credit card repayment

Whenever it comes to paying off credit card debt paying the suggested minimum repayment is a recipe for letting your debt continue to grow. When it comes to credit card interest, you only pay interest on the balance you leave owing at the end of the month. 

If you only make the minimum monthly payment, you’re likely to keep racking up that credit card balance and accumulating interest. 

Habit breaking hack: Schedule your automated credit card payments for more than the usual minimum payment required. If you pay any bills on your credit card, make sure your credit card repayments cover the amount you know you’ll pay on those regular transactions. If you’re having a spending-heavy month, get into the habit of making an additional credit card repayment to counteract this.

Saving your credit card details to automatically fill in

It’s all too easy to save your credit card details on every device available, making online shopping a breeze. However, with credit card details set to prefill on your phone and your browser, it’s all too easy to slip into impulse purchase territory. 

Things you might normally put on a debit card or pay for directly from your bank account can turn into much larger commitments when paid for with credit, since you could end up paying them back with interest. It also presents a credit card security risk, should someone else gain access to your devices!

Habit breaking hack: If you simply have to have your details pre-saved, use a debit card or add an extra step of security (like a netcode or two-factor authenticator). Not only will this add some security to your online shopping, but it will add an extra step of hesitation to impulse shopping online.

Taking out cash or making credit card transfers

Most of us aren’t physically taking cash out of our credit cards nowadays, with Aussies increasingly relying on cards and mobile wallets. Lots of us have also learnt our lesson that withdrawing cash on a credit card has no interest free days, and gets charged at a higher rate than the regular purchase rate.

Today, where you might still be getting caught is with transferring money from your credit card. Whether you’re paying someone via bank transfer (like paying rent) or transferring money from your credit card into your bank account, you’ll be hit with that same high cash rate. 

Habit breaking hack: Any regular bank transfer payments (like rent, for example) should not be set up from your credit card, to avoid incurring that cash advance rate. When it comes to transferring money from your credit card, you’ll want to avoid it unless absolutely essential – and you’ll want to pay it back as soon as possible!

Scheduling Buy Now Pay Later payments on credit cards

Like taking cash out at an ATM, most of us have been warned of the dangers of putting personal loan and home loan repayments on credit cards. The last thing you want to do is make payments on a loan with more borrowed money, especially if it’s charged at a higher interest rate (which credit cards usually are). A newer area some of us might not have adjusted our habits for is Buy Now Pay Later.

BNPL is regulated under the National Credit Act, which means that it is legally another form of credit. Paying for a BNPL purchase with a credit card means you could end up paying much more interest on what started as an interest-free purchase (depending on the BNPL service). 

Habit breaking hack: Keep your BNPL and your credit cards completely separate.

Sticking with the same credit card forever

Found a card you liked 10 years ago and never changed? It’s happened to the best of us. Like any financial product, sticking with the same thing forever is probably not going to get you the best deal. 

Whether you’re looking for a lower interest rate, a good boost of rewards points, or you need to chip away at some built-up balance, there could be a better credit card out there for you. At the very least, you could be taking advantage of some introductory interest rates, balance transfers, or bonus points offers.

Habit breaking hack: Check out the credit card calculator to see how your current credit card stacks up against other options in the Mozo database. Keep in mind that if you have any existing balance, you may need to pay a balance transfer fee.

Even though shaking bad habits can be tough, there’s nothing to stop you from responsible credit card use and from finding the right credit card for you.

Start comparing credit cards below, or find our picks for Mozo’s Best Credit Cards.

^See information about the Mozo Experts Choice Credit Card Awards

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