5 credit card mistakes you're making without even realizing it

Credit cards are a powerful tool to help you raise your credit score — so you can get approved for that apartment rental or enjoy lower rates on loans. You can earn cash back on purchases or earn travel reward points.

But if you're not careful? You might wind up with massive credit card debt that will take years to pay off.

Don't let that happen. Here are five big mistakes to avoid when pulling out the plastic.

1. Using the wrong credit card

When applying for a credit card, choose one that matches your spending habits and maximizes your rewards. "More than 20% of customers have a card which has fees or rewards not aligned with their actual purchase habits," according to a 2016 survey by J.D. Power.

When looking for a credit card, comparison shop to find a card that is right for you based on what you buy and what features — like low interest rates if you typically carry a balance — will save you the most money.  You may need a card that has an easy approval process if you don't have a high credit score, or you might opt for a travel reward card if you spend a lot on travel. Or maybe you just want cash back to spend however you please. 

See which features top-rated cards offer, then choose the one that best fits your money habits. Here are Mic's guides to the best credit cards if you're broke — and the best ones if you want cash back or travel points.

2. Just paying the minimum — without doing the math on how much that costs you

Almost 40% of millennials responding to a 2014 Harris Bank survey said they thought carrying a balance on their credit card would help to boost their credit score. 

It doesn't. "Keeping a balance on your card month after month doesn’t improve your credit. In fact, it could lower your credit score somewhat, because scores take into account how much of your available credit you actually use," as Credit.com explains.

But even if you are among the 60% of people who know there is no benefit to carrying a balance, you may not realize just how much interest rates add up. With annual percentage rates as high as nearly 23%, you may be throwing away hundreds of dollars a year.

Here's an example: Even with a relatively modest annual percentage rate of 15%, you could wind up paying a whopping $400 to $450 in interest each year if you carry an average daily balance of $3,000 and just make the minimum payment each year. That's money you could be putting in an emergency account or socking away for retirement.

3. Not asking for perks — or forgetting to use them

Many cardholders don't realize that a simple phone call to their credit card company could pay off big time. Only about half of cardholders call their lender to make a special request, according to a poll from CreditCards.com.

Calling your credit card issuer and asking for a break could get your annual fee waived, lower your interest rate or raise your credit limit. A full 82% of cardholders who call their creditor get their annual fees waived or reduced.

You also need to make a point of using your rewards when you get them. 31% of cardholders who are entitled to rewards aren't redeeming them, according to a Bankrate survey. If you're earning rewards, don't let them go to waste. 

4. Paying even more because you missed the payment deadline

If you're a day or two late because you forget to mail a check, you may very well get hit with a late fee of $25 to $35. If it's your first late payment in a while, try calling your card issuer and asking for the fee to be waived. 

But if late payments are a habit, you won't just be hit with annoying fees. Your credit score will take a hit as well. 

If you're more than 30 days late, the effect of a late payment on your credit score can be really bad — anywhere from 90 to 110 points, depending on your initial credit score, according to Equifax. To make matters worse, late payments can stay on your report for seven years.

If you were behind in the past but have gotten back on track, try writing a goodwill letter and asking the creditor to remove the black mark from your credit report. 

Of course, your best route is to always pay on time — by setting a reminder on your own or opting into billing reminders from your card issuer. And if you are paying late because you are living paycheck to paycheck, it's probably time to rethink your budget.

5. Thinking credit cards are for suckers

A startling 63% of millennials ages 18 to 29 don't have their own credit card, according to a 2014 Bankrate study. That's a big mistake.

"You have to have and use credit in order to build a credit history and credit score," Credit Sesame explained. It's important to apply for a credit card, use the card and pay it off every month so you can establish a history of on-time payments. The average age of your credit accounts also impacts your credit score, so the longer you wait to apply for credit, the harder it will be to earn a good credit score.

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