Lifestyle

5 Credit Card Mistakes That Are Costing You Thousands

By Erica Coleman · May 21, 2026

Americans owe $1.28 trillion in credit card debt at an average interest rate of 25% APR — meaning the average cardholder carrying a balance is spending nearly $2,000 a year in interest alone. Most of that cost comes from five mistakes that financial experts say are completely avoidable.

1. Carrying any balance at all

The average American carrying a credit card balance owes $7,886. At 25% APR, that’s approximately $1,972 in annual interest — money paid for the privilege of borrowing your own future spending. Credit cards are a powerful financial tool when paid in full every month and a wealth-destroying mechanism when used as a loan. If you cannot pay the full balance, a 0% introductory APR balance transfer card is almost always cheaper than letting interest compound.

2. Paying only the minimum

The minimum payment is calculated to keep you in debt as long as possible. On a $5,000 balance at 25% APR, paying only the minimum will take approximately 22 years to pay off and cost more than $8,000 in interest — more than the original balance. Bankrate’s analysis found that most Americans do not understand how minimum payments work, which is precisely why credit card companies make the minimum so visible on statements and the total payoff timeline so hard to find.

3. Closing old cards you don’t use

Closing a credit card you no longer use reduces your total available credit, which increases your credit utilization ratio — a factor that accounts for approximately 30% of your FICO score. A higher utilization ratio lowers your score, which raises the interest rates you’ll be offered on future loans, including mortgages. If a card has no annual fee, keeping it open and unused costs you nothing and protects your score.

4. Missing payments

Payments more than 30 days late appear on your credit report and stay there for seven years. A single missed payment can drop your credit score by 60 to 110 points. That drop can cost you thousands in higher mortgage or auto loan rates over years. Setting up autopay for at least the minimum payment eliminates this risk entirely — and then you can pay the full balance separately when you choose.

5. Stacking Buy Now, Pay Later on top of credit card debt

BNPL purchases do not appear on your credit report, which means lenders cannot see them when evaluating your borrowing capacity. A consumer with $5,000 in credit card debt and $1,200 in active BNPL installment plans looks the same on paper as a consumer with only the credit card debt. When budgets tighten, BNPL plans default first — triggering late fees that often exceed credit card interest rates — while also damaging the credit score that determines what everything else costs you.