The mighty credit card. At first it seems to pave the pathway to greatness. An avenue to purchasing goods that you may have deprived yourself of otherwise. However, sometimes we can take it a bit too far. Credit cards are often used as a quick way to put off a financial worry. But often you’re just delaying the inevitable. Here are some credit card mistakes that you should avoid:

The clue is in the title.

Financial advisors at Max Funding say, “if you have multiple credit cards and outstanding debt, it can seem like the easiest option to pay off one card with another. However, you’re not really paying off a debt, you're delaying it and adding interest to it.” They recommend, “figure out a repayment plan and budget your finances. More work, but smarter.”

Closing Your Credit Account without Consideration

It can be tempting once you’ve finally paid off your massive debt to chuck your credit card into a shredder or snip it with the scissors. Please note that doing this does not actually close your account, you’ve just destroyed your card. They can still charge you interest and annual rates if you have an account.

Closing your account can only have a negative effect on your credit rating “since your level of credit card debt, including your credit usage to available credit ratio, is 30% of your credit score” If you close it with a balance then your available credit goes to $0, which implies that you maxed out your card. Be mindful of your credit decisions!

Using Credit more than Debit

Credit cards are meant to be used for extra purposes, treats, online purchases that you couldn’t make otherwise. They should not be used for everyday expenditure like milk, bread, cash or a cup of coffee. Stick to cash or even debit cards to avoid your daily cup of Joe digging a mountain sized hole in your pocket.

A report shows that the number of credit card accounts has increased by just 1.9% for the year to April 2011 and that the number of debit card accounts has increased by 7.8% over the year. People tend to make more transactions in debit cards than credit cards.

Making Only The Minimum Repayment

Repaying the minimum amount on your credit card can seem like the cheaper option at first. However, you’re actually landing yourself with higher interest and “increasing the real cost of whatever you purchased exponentially. Say you have a $4,000 balance on a card that requires a minimum payment of 2 percent, and your interest rate is 18 percent. It would take you 428 months…and $10,397.20 in interest to pay off that debt. After realising this, you may want to get out of debt right away.

Indulging In Cash Advances

Many credit cards offer customers a cash advance which they can avail of from an ATM. However, this isn’t free money as “cash advances have a higher interest rate than standard purchases, usually between 19.99% p.a. and 21.99% p.a., with no interest free period available” Plus, there is usually a transaction fee as well as a flat fee. It can be useful in an emergency situation, but do not use it to pay a bill or rent. If you’re stuck, consider other financial options such as a bank transfer, or an overdraft.