The biggest mistakes people make with their credit card debt

The Street

Ted Rossman, Senior Credit Card Analyst at Bankrate, joins TheStreet to share the biggest mistakes people can make when handling their credit card debt.

Transcript

00:00What are some of the most common mistakes that people make when managing their credit card debt?

00:07One big mistake is some people erroneously think that you need to carry a balance to

00:11build credit. That is definitely false. The best way to use a credit card is to pay in full each

00:16and every month. That's when rewards are worth it. That's when you're avoiding interest. That's

00:21really tip number one with a credit card. Use it like a debit card. Credit cards have better rewards

00:27and better buyer protections. The one big drawback is debt. So you have to know yourself,

00:31too. I mean, if you have credit card debt or you think you're going to overspend,

00:35maybe stick to cash or debit. Get that zero percent balance transfer card to pay down your

00:41debt. So there are a lot of misconceptions about debt and whether or not to carry a balance.

00:48But some people avoid credit to their detriment. You know, sometimes I hear from younger adults,

00:52including one of my younger brothers, who are kind of scared of credit and they don't want

00:56to use it. That can come back to hurt you at some point because then you're not building credit. So

01:02then when you want to buy a car or rent an apartment or buy a house, you may not have a

01:06credit score. That's been a pain point among a lot of young adults, is that as it's become harder to

01:12get a credit card and as some have kind of self-selected out of credit cards, it's important

01:17to build credit. I wish Buy Now Pay Later plans reported to credit bureaus more. Most of them do

01:23not. A lot of young adults are not building credit, so it's important to use it, but use it responsibly.

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