{"id":2154,"date":"2025-08-07T11:59:42","date_gmt":"2025-08-07T11:59:42","guid":{"rendered":"https:\/\/ft365.org\/index.php\/2025\/08\/07\/4-ways-you-might-be-making-your-card-debt-more-expensive-bankrate\/"},"modified":"2025-08-07T11:59:42","modified_gmt":"2025-08-07T11:59:42","slug":"4-ways-you-might-be-making-your-card-debt-more-expensive-bankrate","status":"publish","type":"post","link":"https:\/\/ft365.org\/index.php\/2025\/08\/07\/4-ways-you-might-be-making-your-card-debt-more-expensive-bankrate\/","title":{"rendered":"4 Ways You Might Be Making Your Card Debt More Expensive | Bankrate"},"content":{"rendered":"
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Using a credit card is simple in theory: You borrow money, then you pay it back. If you don\u2019t pay all the charges in full when your bill is due, interest starts to accrue. If you miss a payment, you\u2019re hit with extra fees.<\/p>\n

But as many Americans know all too painfully well, there\u2019s more to effective credit card usage than just paying on time. In fact, you might inadvertently make your credit card debt more expensive without even realizing it.<\/p>\n

Here are some common credit card habits that can have a more damaging effect on your finances than you realize.<\/p>\n

1. Making only minimum payments <\/h2>\n

When you receive your credit card statement, it shows the minimum payment, or the least amount you need to pay for your account to stay current. Usually, it\u2019s a flat percentage of the balance (although your card issuer may add new interest, past-due amounts or fees). Since it\u2019s a much smaller amount than what you owe in total, it\u2019s tempting to pay just that. But if you consistently make only minimum payments, you might be putting yourself in expensive debt \u2014 for a long time.<\/p>\n

For example, let\u2019s say you owe $2,000 on your credit card that charges an APR of 20 percent, and the minimum payment is 2 percent. If you only pay that, it will take you close to 34 years to pay off the debt, and you\u2019ll pay $7,125 in interest, according to Bankrate\u2019s minimum payment calculator.<\/p>\n

As you can see, only paying the minimum is rather costly, to say the least. Of course, if that\u2019s all you can pay, a minimum payment is better than nothing. Otherwise, it\u2019s best to put as much as you can toward your card balance. Ideally, you want to pay it off in full every month to avoid interest altogether. That\u2019s the healthiest credit card habit you can develop.<\/p>\n

2. Taking out cash advances<\/h2>\n

You can take out cash from your credit card. That\u2019s an appealing feature when you\u2019re short on money and need a quick solution. However, you don\u2019t want to start relying on borrowing cash from your credit card issuer. In fact, a cash advance should be your last-resort option.<\/p>\n

This is because card issuers have a separate set of fees for this type of transaction. To start, a cash advance has its own interest rate that\u2019s different from the card\u2019s regular APR, and it\u2019s typically higher. It also kicks in immediately as cash advances don\u2019t have a grace period (or a period between the end of a billing cycle and the payment due date during which the issuer may not charge you interest.) Finally, you\u2019ll pay additional fees: a 3 to 5 percent transaction fee and ATM fees if you use an out-of-network ATM.<\/p>\n

Let\u2019s say you have a financial emergency and take out a $500 cash advance. You pay a 5 percent cash advance fee ($25), so now you have a $525 balance at 30 percent APR. Credit card interest typically accrues daily, and in just a month, your balance would grow to $539. As you deal with the emergency, you only pay $15 on the card per month. After five months of this, your balance is $533. That\u2019s higher than you started with, and that\u2019s after making $60 in total payments.<\/p>\n

To avoid such high-cost credit card transactions, it\u2019s best to find alternative solutions when you\u2019re short on cash \u2014 and only use your credit card for regular purchases.<\/p>\n

3. Repeatedly transferring balances <\/h2>\n

A balance transfer can be a smart debt consolidation strategy when you\u2019re dealing with card debt. A 0 percent APR period on balance transfers allows you to pay down the debt you move from one card to another without interest charges.<\/p>\n

However, this method is no cheap trick. It\u2019s an approach that requires discipline and a solid debt payoff plan. And if you find yourself in a cycle of balance transfers trying to escape paying interest, you might accidentally be putting yourself in a debt trap.<\/p>\n

Once you transfer a balance, the key is to stop making new charges on your credit cards until you\u2019re out of debt. That includes both the card you moved the debt from and the balance transfer card.<\/p>\n

Otherwise, adding to your existing debt defeats the purpose of this strategy. Instead of reducing debt, you end up with two balances, one of which once again accrues interest charges. Another balance transfer won\u2019t fix the issue. Only commitment to full debt payoff will.<\/p>\n

4. Chasing rewards <\/h2>\n

A rewards credit card can be an excellent tool. Cash back lets you put a bit of money back in your pocket every time you make a purchase. Points and miles help you save on travel. But getting carried away with earning rewards can quickly backfire if:<\/p>\n