Getting a credit card when you arrive in Canada is a great way to build a credit history, but you must avoid making common mistakes. From spending more than your credit limit, to only paying the minimum monthly payment, these mistakes can damage your credit score and make it difficult to achieve your financial goals. Learn how to avoid these financial mistakes and what you can do to stay in good standing.

Credit card issuers make it easy for you to repay your balance by allowing you to make minimum monthly payments. Sometimes you may only afford to make the minimum monthly payment, but avoid making this a habit. When you only pay the minimum payment each month it increases the amount of time it takes to pay off your balance and you’ll pay much more interest. It also means that you will likely never pay off the full amount of your card.

A better approach is to pay the full balance. If that’s not possible, pay more than the minimum monthly payment to accrue less credit card interest and pay your debt faster.

Missing payments means that you will have to pay a late payment fee. And late payment fees can add up quickly. To avoid late payment fees, you can set up an automatic payment to your debit card. Remember, you should pay off the full balance each month. Falling behind in your payments can lead to higher credit card interest charges and your credit score will suffer. Meeting your monthly payments shows creditors that you manage your money well.

If you don’t open your credit card billing statement, you risk missing your payment due date or paying less than you should be. Ignoring your statement could cause you to miss important announcements about changes to your credit card terms. Review the monthly transactions to ensure that there are no purchases that you did not make or approve. If there are any errors, contact the credit card company immediately to discuss the transaction.

Missing payments will also cause your credit score to decrease. Missed payments can remain on your credit report for up to six years.

If you lose your card, the first thing that you should do is report it to your financial institution. The longer it takes you to report a lost or stolen card, the greater the chance of fraudulent activities. Reporting a lost credit card quickly shows the bank that you are responsible.

This credit card mistake is important to avoid. As a newcomer, in your first few months, you will likely have some unexpected expenses you didn’t budget for. A credit card can be a short-term solution but you should never max out a card to its limit. When you max out your credit limit, it indicates to creditors that you are living beyond your means.

It’s better to spend less than 30% of your credit limit. This is known as the credit utilization ratio to assess how much credit you have versus how much you use. This ratio is also about 30% of your credit score calculation. Getting close to your credit limit puts you at risk for over-the-limit fees and penalty interest rates you’ll have to pay when you exceed your credit limit. Maintain a low balance on your card for a healthy credit score and manageable payment amount.

Avoiding these credit card mistakes will help you reduce financial stress, increase your credit score, and build credit history.