Since managing credit cards is something they don’t teach you in school, it’s easy to make a mistake. The allure of “money now” draws a lot of people in when they’re first starting out. Even if you do put off getting a credit card, you may acquire one in the future so that you can establish credit. The temptation is usually too much for most people to handle. That’s when you make one of the worst mistakes possible that could ruin your credit forever.

The Big Mistake

Credit cards don’t start charging interest on your purchases immediately. They usually give you a grace period from the purchase date to the end of the billing cycle. Unfortunately, 57% of users carry this balance over a least to the next month.

This means that their entire balance is being charged interest. A similar mistake is not paying off your balance before a promotional period of 0% APR is over. If you owe any money when that promotion ends, the company will charge you back interest on all purchases.

The Aftermath

If you don’t know much about credit scores, you may have been told that carrying a balance helps your score. This is simply not true. One of the greatest factors affecting your score is your credit utilization.

Credit utilization is how much credit you are using compared to how much credit you have. If you carry over a balance, this percentage may be high. It will undoubtedly lower your score.

A Few Solutions

There are a few ways to resolve this issue if your score is already in trouble. The most difficult but quickest solution is to simply pay off the credit card as soon as you can. Since this isn’t practical for all financial situations, there is something else you can do.

Consider transferring high-interest balances to a balance transfer card. If you get an introductory, 0% APR offer, you will stop accumulating interest on that debt. Just be sure to pay off as much as you can before the introductory offer runs out.