People sit on either side of the fence when it comes to credit cards.

You either love them or you hate them. At least that’s what it seems like. Part of it is due to all the horror stories you hear about people being buried beneath shopping sprees.

It takes the right type of person to properly wield the plastic.

If you use them right, they can actually become an asset. Some people make a literal side hustle out of points and fine print! You just need to know the ins and outs.

So, to start, here are some common mistakes that people tend to trip on.

1. Applying for too many cards

Remember the people I mentioned who earn points as a side hustle?

It’s great and all, but you must be aware of something. Applying for too many credit cards can be harmful to your credit score. I’ll explain how it works.

When you apply for a new line of credit, an inquiry goes on your credit report. It appears as a hard inquiry since a lender needs to review your credit to approve you for a new card. Hard inquiries affect your credit score.

The more inquiries you have, the riskier you appear to lenders.

To avoid applying for too many cards, keep it to a maximum of 2 per year. Also, plan and strategize which cards you’ll apply for to have a collection covering all bases.

Whether that be travel, cash back, or entertainment, do your research.

2. Carrying a balance

Keeping a month-to-month balance on your credit card is not a great idea.

It can pile up easily if you’re not paying attention, which gets out of hand. The more credit you use, your credit utilization rate will be higher.

Typically, you’d want a lower utilization rate.

On top of that, you might have some fantastic rewards on your card! If you’re spending (and carrying over a balance) you’re most likely earning those points. But what good are they if you need to spend them on interest payments?

Efficient use of a credit card is important. The best way to avoid a constant balance is to set up automatic payments if you can.

3. Making minimum payments

You might feel fine making minimum payments right now.

Unfortunately, it ends up snowballing. The more time you take to pay off the debt, the more you’ll pay in interest.

Not a good situation.

Again, the best way to avoid this is by paying as much as you can each month or making automatic payments. It helps with consistency and eliminates the possibility of forgetting.

4. Missing payments entirely

This is where credit scores take the biggest blow.

Missing a payment (if over 30 days due) can cause a crazy drop in your credit score. And getting approval for a loan becomes much more difficult when your credit goes down. Not only that, but it’ll be more expensive to borrow from a lender.

It’s a sad cycle to start.

The best way to avoid this is by trying to get those payments in before the 30-day grace period, even though you may incur some late fees. Anything is better than a knock on your score!

5. Misunderstanding fees and APR

Did I mention the fine print earlier?

Pretty positive. The little things you might not have noticed, are secretly super important. For example, your credit card might have an annual fee that you didn’t know about.

This is standard for many cards, but it’s possible to be overlooked.

You must make sure that the annual fee is justified by the potential rewards. If you fail to do the due diligence, you might take a deal that’s not worth it for you and hurt your income potential in the process.

All the little fees and introduction bonuses must be checked as well. The last thing you want is to be stuck with a card that starts with 0% APR and jumps up to something outrageous unexpectedly. That could go south.

Sometimes, it pays to do your homework.

Especially with something as important as your credit cards!