Common credit card mistakes and how to avoid them

Carrying a balance on your credit card from one month to the next may not be recommended but for many Americans it’s unavoidable. On the latest episode of PennyWise, show producer Ambre Moton is joined by John Kiernan, managing editor of WalletHub, who shares the the top credit card mistakes to avoid. 

Read more on WalletHub here!

About this program

Nat Cardona is host of PennyWise as well as Lee Enterprise's true-crime podcast Late Edition: Crime Beat Chronicles. Lee Enterprises produces many national, regional and sports podcasts. Learn more here.

John Kiernan is the managing editor at WalletHub. He oversees WalletHub’s content strategy and helps produce product reviews, educational guides, and other content to help answer people’s financial questions and help them save money.

John joined WalletHub’s parent company as a writer in 2010. Since then, he’s helped build WalletHub from the ground up, becoming one of the most senior members of the team. His previous work experience includes USA TODAY, US News and The Washington Post.

Episode transcript

Note: The following transcript was created by Adobe Premiere and may contain misspellings and other inaccuracies as it was generated automatically:

It's been hammered into our heads to not carry a balance on our credit card from month to month and to live within our means. And yet Americans are notorious for being fairly deep in credit card debt. Welcome to Pennywise Lee Enterprises podcast. I'm Ambre Moton, the producer and editor of the show filling in for Nat Cardona. WalletHub managing editor John Kiernan is joining me to talk about credit card mistakes to avoid.

Based on the article, it looks like there's eight common mistakes that people make in regards to credit cards. So let's start with that. There are so many options for credit cards right now. What should people be taking into account when selecting cards? What are the most common credit card selection mistakes?

Sure, the first one right off the bat is not having a credit card. Some people kind of think it's dangerous to have one, but really not having one is is dangerous, especially for your credit, regardless of what card you pick. If you have a major credit card, it's going to be reporting information to the major credit bureaus monthly.

And so you could have a card with no annual fee that you lock in a drawer and still benefit. So kind of the fear of credit cards that some people have is one thing you immediately need to get over. Beyond that, as you mentioned, there are tons of options. We track more than 1500 cards in our database at WalletHub.

And so it really what you focus on really depends on who you are as a consumer and what you're looking for from your card. And that might seem obvious, but it can be more difficult in practice. The first thing we recommend people doing is checking their credit score. This will immediately kind of focus you on a segment of the market.

You have a pretty good idea that you'll be approved. So if I check my credit score and say that it's 700, I say, okay, maybe I have a pretty good chance of getting a credit card that requires good credit and I can kind of rule out the ones that are have lower requirements that are very attractive or the ones that require excellent credit outright.

And beyond that, just kind of the main rules of thumb are if you're going to pay in full monthly, you should focus on rewards because interest rates don't matter in that scenario. So you can kind of a card that has excellent rewards and a really high interest rate, that's fine. The interest rate won't affect you. Conversely, if you're going to carry a balance, we recommend trying to get a card with a 0% introductory rate to really kind of be able to finance whatever big ticket purchases or balance transfers you need to do in the short term and then get out of debt before the high regular rate takes effect.

Pretty much no credit cards at the moment have very low regular, ongoing APR. So you kind of have to take advantage of limited time deals.

I know I'm constantly getting all the offers where it's like, Hey, here's this, here are all the perks, here's all of that. So I really like you talking about if you're going to pay it off every month, then go ahead and go for those.

And those offers you get in the mail. Like a lot of times people will just say, I got an offer. Let me apply for it without context, which is the wrong approach. But you can use those to get a sense of what kind of offers you have good appr