Menu
Save, make, understand money

Credit Cards & Loans

Huge majority of credit card holders admit to costly mistakes

Huge majority of credit card holders admit to costly mistakes
Matt Browning
Written By:
Matt Browning
Posted:
16/05/2024
Updated:
16/05/2024

Eight in 10 credit card holders admit to making common mistakes that will impact their credit score, a comparison site finds.

The most common errors were withdrawing cash and only making the minimum repayments, which affected 37% and 35% of credit card users.

Another regular credit card mistake was getting too close to the credit limit, which affected a third (34%) of the 2,000 respondents surveyed by Compare the Market.

When it comes to the most expensive mistake to make with your plastic, not paying your credit balance is on top, which 32% of cardholders do.

This leads to an average expenditure of £194 in interest.

This also impacts your credit score negatively, as do making late repayments and using more than half of the credit limit, which around a quarter of users did for both.

There were common knowledge gaps too, with seven in 10 declaring they were unaware what their interest rate (APR) was. Nearly half (49%) also didn’t compare providers, meaning they were most likely missing out on the best rates.

As it stands, credit rates have shot up by 6.9% in the last 10 years, despite the Bank of England base rate increasing by 4.75%. The base rate was held for the sixth consecutive time after the Monetary Policy Committee (MPC) voted by a majority of 7-2 to keep it at 5.25%.

Indeed, the base rate only rose by 0.25% between 2014 and 2022, but major lenders upped rates by an average of 2.6%, according to Totally Money’s data.

‘Always best to pay off credit card in full’

Andy Hancock, money expert at Compare the Market, said: “If you can afford to, it’s always best to pay off your credit card balance in full every month. That way you’ll avoid having to pay interest.

“At the very least, you must make the minimum monthly payment. Setting up a direct debit payment could help ensure you pay on time.

“If you’re struggling to pay, you might be able to reduce repayments, or prevent having to pay more interest, by switching from a standard APR card to a card with an interest-free period.”

Hancock added: “You might also be able to save money by switching to a credit card with better rewards or by shifting debt from multiple credit cards to a single card. It’s worthwhile shopping around online and comparing cards to find one that best suits your needs and circumstances.”

If lengthy agreements and unwelcoming jargon are causing you confusion, check out YourMoney.com’s credit card glossary.