Crushing your money goals in 2025 will be a lot easier if you aren’t saddled with paying sky-high credit card interest and fees every month.
The Federal Reserve may have cut interest rates last year, but credit card APRs are still well over 20%. If you carry a credit card balance from month to month, that interest compounds, causing your debt to balloon quickly and potentially leaving you perpetually digging out of debt.
And the more money you have to throw at your credit card debt each month, the less you have to save for other goals. Overwhelming credit card debt can also potentially end up hurting your credit score, which can make it harder to get the best mortgage rate or other loan.
With all of this in mind, it’s more important than ever to be intentional with your financial tools, especially credit cards. That means avoiding these common credit card mistakes in 2025 to ensure you can reach your financial goals.
8 credit card mistakes to avoid this year
How you use your credit card will determine whether it’s a boon for your finances or a costly mistake. For the most part, you can use credit wisely by using your cards only for planned purchases and paying your balances in full each month. Here are eight pitfalls to avoid.
1. Paying your credit card bill late
Missing a payment or making a late payment on a credit card is the biggest credit mistake you can make. Your payment history makes up 35% of your FICO score, meaning that late payments can ding your credit in a major way. Not only that, but late payments can lead to late fees and being charged a much higher penalty interest rate on your remaining balance.
Also, late payments can stay on your credit reports for up to seven years, so the impact on your credit can be long-lasting. The consequences become even worse the longer you go without paying, with your debt eventually entering delinquency and moving to a collection agency.
The best way to avoid late payments is to know your credit card bill’s due date. Most credit card companies will let you set up monthly auto-payments, so you won’t skip a beat.
If you do pay your credit card bill on time regularly and accidentally miss one payment, call your bank as soon as possible to see if it will waive the fee, provided you pay in full at the time of your call. Your bank might refund your late fee and interest, but it isn’t required to do anything.
2. Maxing out your credit cards
After payment history, the second biggest factor in determining your credit score is the percentage of available credit you’re using. Referred to as “credit utilization rate,” this factor is calculated by dividing the amount you currently owe by your total credit limit or your maximum borrowing potential.
You usually want to keep your credit utilization ratio under 30% for a good credit score, although keeping it lower is better. A good rule of thumb is to use 10% of your total credit limit and pay it off each month so you’re not carrying a balance. For example, if your credit limit is $5,000, you wouldn’t want to borrow more than $1,500 and ideally $500 or less.
3. Carrying a credit card balance
Carrying a ton of debt on a credit card can be a costly mistake that could leave you struggling for years.
For example, imagine you owe $5,000 on a credit card with an interest rate of 20%. If you paid $133 per month, you would wind up paying $2,926 in credit card interest, and it’d take you five years to pay off the original balance.
It’s best to pay off any purchases you make right away, if possible. If you currently carry credit card debt, make a plan to pay off the debt.
4. Making only the minimum payment on your credit card
Your minimum payment is the lowest amount that your credit card issuer will allow you to pay toward your credit card bill for any given month. The minimum monthly payment is determined by the balance on your credit card (what you owe at the end of the pay period) and your interest rate. It’s generally calculated as either 2% to 4% of your balance, a flat fee or the higher amount between the two.
Although making minimum payments on time is still far better than paying late or ignoring your bill, paying only the minimum can allow interest to pile on and cause your balance to grow.
Here’s an example of how making more than the minimum payment of $40 on a $2,000 balance can save you significant money in interest.
How paying more can save money
| Credit card balance | Annual percentage rate | Monthly payment | Time needed to pay the balance | Additional interest paid |
|---|---|---|---|---|
| $2,000 | 20% | $40 | 9 years, 1 month | $2,336 |
| $2,000 | 20% | $120 | 1 year, 8 months | $362 |
The best way to avoid paying any interest at all on your credit cards is to pay off your full balance each month. If that’s not possible, try to make at least more than the minimum payment to wipe out your debt faster.
5. Taking out a cash advance on your credit card
Cash advances are a method of borrowing money from your credit line to put cash in your pocket. But using your credit card for a cash advance is a big mistake.
Convenient as it may be, a cash advance uses an interest rate that is typically significantly higher than your standard APR. Most cards will also include a transaction fee of 3% to 5%. Beyond that, there’s no grace period for cash advances, so you’re charged interest from day one. If you need cash in a hurry, there are options that are less risky, like applying for a personal loan.
6. Chasing credit card rewards without a plan
If you’re considering opening a new credit card account to get money back or rewards on your purchases, first think about what kind of credit card best fits your current spending habits. If pursuing a reward causes you to overspend, you could end up carrying a balance on your card. The interest charges could wipe out any value you earned from the rewards.
Credit cards that offer lucrative rewards and extra perks may also charge higher annual fees, so be sure to figure out if a credit card’s annual fee is worth it before you apply.
If you’re chasing rewards at the expense of your budget, try to come up with a plan to pay your balance down instead.
7. Not paying off your balance during a 0% APR period
Using a 0% intro APR credit card can be a good strategy to pay off your debt or finance a large purchase, but it can be risky, too. If you’re considering a 0% intro APR credit card for new purchases or a balance transfer, make sure you read the fine print.
Typically, there’s a fee to transfer your existing balance, commonly 3% or 5% of the balances transferred. Also, the introductory 0% rate only lasts for so long, typically between nine and 21 months. That means you’ve got a limited time to pay off your balance before a higher APR kicks in.
To create a simple repayment plan, take the amount you owe and divide it by the number of months in your 0% APR promo period. Then pay that amount monthly to pay off your balance while you are borrowing without interest.
For example, if you buy a $400 TV using a credit card with an intro 0% APR for nine months, making $50 monthly payments allows you to pay off the balance before the no-interest period expires.
8. Not checking your billing statements regularly
How often do you check your monthly billing statement? It can be an eye-opener to see how much money you really charge on your credit card, especially if it’s routinely more than you bring home each month.
Spending $20 here and there may not seem huge, but it can add up quickly.
Tracking your credit card spending isn’t the only reason to check your billing statement. You should review transactions for potential fraudulent charges and gray charges.
If you are worried credit cards will lead you into a debt spiral that’s difficult to escape from, you may want to avoid using plastic altogether — consider using a debit card instead to help you stick to your budget. This might mean you’ll miss out on credit card rewards and perks, but it also means avoiding credit card debt and the challenges it can cause.
