I got my first credit card earlier this year, and it’s safe to say I definitely did not use it properly. Like, at all. I learned a few hard lessons along the way during my first year of having ~credit~, and I thought I would share these with the TFD community, so maybe you won’t be a dumbass like I was. (Hopefully.)
1. Using more than $30% of your available credit.
Credit utilization makes a huge impact on your credit score, so please, please, please, keep it below 30% if you’re able. Your credit score affects so many areas of your life, and to damage it because of credit card utilization is just really not effing worth it.
Currently, I am trying to get my credit utilization down. It got incredibly high this year, and it affected my score big time. While my score is still “okay,” it’s definitely not as great as it was, and if I don’t get it lower soon, I could be in some real trouble. It’s been stressful to say the least, and I truly regret spending beyond my means.
2. Spending more than you’re able to pay off each month.
Even if you’re able to make the minimum payments each month, carrying a balance will 1) affect your utilization and 2) your annual percentage rate (APR) can go through the roof if you’re not careful. In the end, you can end up owing more than you initially thought you would.
At first, since I was making the minimum payments every month, I thought I was in the clear for how I was using my credit card. So I continued charging things that, to be honest, I really didn’t need. As I mentioned above, my credit card utilization percentage skyrocketed, and my credit score dropped. Over-utilization is detrimental to your score and your overall finances.
3. Bringing your card out while you’re intoxicated.
Just leave it at home, dear lord. It’s better to not have the temptation of having your credit card with you while you’re out, especially when your inhibitions are lower. There are no emergency shots you’ll need to take. And, no, you really don’t need that Q’Doba at 2 AM when you leave the bar. Make something at home. Trust me.
There have been a few times this year when I was a little tipsy and used my credit card while out and about. One time I super regret was when a few friends were in from out of town, and I decided it was a good idea to buy us a round of shots. $30 later, and I can definitely say 1) we didn’t need them 2) not worth it. At all.
4. Plugging your credit card numbers to use for Lyft or Uber.
Even if you’re splitting rides, $3-$5 can add up pretty damn quickly, and it’s easy to forget to transfer over money for such tiny charges. At the end of the month, you find yourself asking, “How the hell is there an extra $25 on here?” Lyft and Uber, my friend. Lyft and Uber.
I put my credit card as my default payment method on Lyft, which I thought it was a good idea just in case my checking account ever got low and I needed to get a ride home. But, if your checking account is that low, you shouldn’t probably be going out (and taking Ubers home) in the first place.
5. Emotional spending when you just need a “pick me up.”
“I’ll pay it off at the end of the month!” you say. “I’ll pay it off when payday comes around!” you claim. And while sometimes this is definitely possible, eventually these things may not go according to plan. Life happens, shit goes wrong, and you can find yourself in some serious financial trouble because you thought you could pay something off that, in the end, you couldn’t. (At least not in the time you needed.)
There were several times over the past year when I was feeling pretty low, and would saunter into places like Ulta and buy shit that I thought would make me feel and look better. News flash: it didn’t. I just felt guilty and wasn’t any hotter. It was just a waste of money that I didn’t even have.
So, please, do yourself a favor and wait on purchases that are wants and not needs. It’s never worth investing in tiny, frivolous expenses that satisfy your need for instant gratification. Wait for the purchases that actually will improve your life and that you’ve had plenty of time to think over.
Your financial and mental health will thank you.
Molly is an assistant digital strategist by day and a writer by night. She drinks way too much coffee and can be found on Twitter here.
Image via Unsplash