Managing all aspects of household finances isn’t always easy for the average consumer, and one area where many make missteps is in dealing with their credit cards. Fortunately, some problems are more common than others, and are therefore easier to avoid as well.

One of the easiest ways consumers can see their credit card use turn problematic is in not properly budgeting for everyday spending on the card, according to a report from CBS MoneyWatch. The savviest consumers will only tap their credit card accounts when they have to buy something that they otherwise would not have the cash on hand to purchase. This may include larger purchases like appliances or other items for their home. But when it comes to everyday spending – a cup of coffee here, or lunch there – that’s where the outstanding debt can really add up. Instead, consumers should think about only paying for these common items with cash or debit so they don’t learn the perils of overspending the hard way.

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Another common mistake consumers regularly make with their credit cards is using them to pay their other bills, the report said. While this is occasionally unavoidable given how financial emergencies have a tendency of cropping up unexpectedly and at the last minute, doing so regularly should be avoided at all costs. This practice is actually quite common during the first few months of the year because many opt to put their annual tax bills on their card, without realizing that doing so also incurs what can occasionally be a sizable “convenience” fee.

And one way many consumers look to reduce the risk of overspending on their credit cards is by using a rewards card – which many may view as giving them “free money” for spending they would do anyway, the report said. However, these cards typically come with higher interest rates and annual fees than no-frills cards, meaning that unless the balance is being paid off in full every month, borrowers may actually end up paying more to keep the card than they’re earning in points.

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The best advice a consumer can follow with regard to their credit card, though, is to use common sense. If a financial decision doesn’t seem to make much sense, it should probably be avoided.

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Many consumers have likely heard about the biggest ways they can damage their credit score, such as by missing a scheduled payment or by carrying too large a balance from one month to the next. However, there are other ways consumers can inadvertently see their scores slashed that may not occur to them.

For instance, one of the biggest mistakes that consumers who are working to improve their credit rating may end up making is closing their credit card accounts, according to U.S. News and World Report. The problem with this mistake is that it seems like a great idea: After taking months or even years to reduce an existing balance to zero, closing out the card might help avoid the temptation of using it again.

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But this is actually a bad idea because one aspect of a credit score that many consumers may not know about or consider is that the average length of time they’ve held their various accounts is a major part of a credit rating. Therefore, shutting one down, especially one that’s existed for a long time, will actually hurt their rating.

Another mistake many people make that may seem to have nothing to do with their credit is not filling out the right forms when they move, the report said. For instance, this might lead them to miss their credit card bills, which may still be sent to their old address. An easy way to avoid this is to either get statements sent via email or make sure to fill out a change of address form from the post office.

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Sometimes, having a credit card with no limit can be problematic as well, because unless the card is specifically reported as being so, it might have an adverse effect on a consumer’s credit utilization ratio, the report said. For instance, racking up any kind of balance on this card will be applied to the credit utilization for their other cards, boosting it unfairly and thus lowering their score significantly.

It’s important for consumers to review the terms of any credit card they open to understand how the account is reported to the credit bureaus, so that they can better manage their finances in a way that will improve their credit standing over time.

When consumers receive their annual tax bill, it may be larger than they expected or can afford to pay at once, and in many cases, some may even consider paying the total off with their credit cards.

However, there are a number of downsides to paying one’s annual tax bill with credit cards, according to a report from USA Today.

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The most significant of them is that consumers will have to pay an added fee just to push the transaction through. This charge, known as an interchange fee, is something that shoppers very rarely see so plainly in everyday life, as the companies they’re buying from almost always pay them – and usually build that added cost into the prices of the items they sell.

But the Internal Revenue Service will not pay them, though, and the interchange fee consumers pay on their tax bill depends on their credit card lender, and can range anywhere from 1.89% to 3.93%, the report said. That means a consumer who has a $1,000 tax bill, for example, might have to pay as much as $39.30 just to put the bill on their credit card.

However, there are a number of other consequences that consumers may end up facing if they put their tax bill on their credit card, the most obvious of which is that they’ll be adding to their outstanding debt significantly. In addition to the added cost of the transaction fee, that might mean that they will have to pay far more in interest payments if they don’t pay off the balance in full at the end of the next billing cycle.

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Another issue is that it can negatively affect consumers’ credit standing. The second-largest portion of a consumer’s credit score is based on how much of their available credit they’re using at any one time. Those who add thousands of dollars or more to that total in one fell swoop will likely take a huge chunk out of that rating, because as far as lenders are concerned, the less available credit that gets used, the better.

In many cases, those who can’t afford to pay tax bills all at once can contact the IRS to negotiate a repayment plan that will help them to better manage the bill without putting it on their credit card or not paying it at all.

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There are many different ways to use a credit card, but some behaviors may be putting consumers at greater financial risk than others.

Consumers who only use their cards sparingly, such as in the event of a financial emergency or only to make larger purchases, will typically not face the same kinds of financial risks that those who use their credit cards to make everyday purchases will. But in either of those cases, the key is responsibility when it comes to making payments every month. The more you are able to pay off, the better your financial situation because you will face less in interest payments down the road.

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But one kind of credit card habit that can be seriously damaging to consumers’ finances and credit standing involves using their account to buy items they cannot afford. It can obviously be tempting to do this: consumers may see an item they want to buy but know they don’t have the cash on hand to make such a purchase, and think that they can afford it if they put it on their credit card.

Suppose such an item costs $500, but the consumer can only afford to pay $100. That means they’re taking on $400 in debt to purchase it, simply because they want it. That might not seem like a lot in the scheme of things, but think about like this: that $400 will probably go unpaid for at least a month, and will therefore incur a bit of interest, especially if the consumer has a card with a large APR. In addition, that’s $400 on top of all the other purchases made on that credit card over the course of however long it takes to pay off.

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As a consequence, that one purchase, which may not seem like it will have a big impact, can be the snowball that starts an avalanche. Consumers who use credit cards to live beyond their means may also get themselves into the habit of buying things they can’t afford with that account, and therefore quickly rack up thousands of dollars or more in debt.

A good rule of thumb for making purchases of this type is to simply ask, “Can I afford this, and do I need it?” If the answer to either question is no, purchasing it might not be a good idea.

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It’s human nature to be attracted to a rewards credit card that offers a large sign-up bonus. You spend a certain amount of money within a specified period of time—three months is common—and you get some cash. Ka-ching!

But guess what feature makes people most likely to have a wandering eye when it comes to rewards cards? According to the recent Capital One Quarterly Rewards Barometer Survey results, 49% say that more rewards per dollar spent is a bigger draw than a large sign-up bonus. Only 16% chose the big bonus.

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So don’t feel bad if you now wish you’d made a commitment to a card with more generous rewards. Unlike traditional relationships, you can live happily (and legally) with two rewards cards if it fits within your lifestyle. But before you decide to apply for the latest card that caught your fancy, here are a few questions to answer:

• Is your credit life in order? I know that sounds broad, but I want to know if you’re successfully managing the credit you have right now. If so, then adding another card is OK. But if you’ve frozen your card and you’re constantly trying to defrost it whenever you see a sale at your favorite department store, then stop right there. You don’t need more access to credit.
• Does the new card offer a different type of reward? Depending on your spending patterns, it’s often a good idea to have a rewards card that offers cash back for everyday expenses and a travel rewards card that lets you earn airline miles. If the cards offer the same type of rewards, but one is more generous, then you can still consider moving forward with the idea that you’ll put the old card in moth balls, so to speak. You don’t have to close it (this might actually ding your score), just store it away safely so it’s there if you ever need it.
• Do you understand the new rewards program? The Capital One survey also showed that consumers’ overall satisfaction with credit cards rewards has declined within the past three months. Almost half the survey respondents said that their experiences would improve if the rewards were easier to understand. All good news for Capital One since the issuer’s rewards programs are pretty simple. But many rewards programs are either complex or just not explained simply enough.  Before you dive in, make sure you read the fine print and feel comfortable that you’ll use the card and profit from it.

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