Credit cards have lots of benefits from consumer protection to rewards and cashback – but to enjoy the perks you’ll need to use them wisely.

New research from Compare the Market suggests many of us are making mistakes when using our credit cards which will not only cost us money but could prevent us from taking out other forms of credit in the future.

Withdrawing cash

It would seem the most common mistakes credit card users are making is using it to withdraw cash.

The price comparison website’s research found 37% of survey respondents were doing this, despite the fact that interest rates on cash withdrawals can be high.

Minimum repayments

Meanwhile, 35% were only making the minimum repayments on their credit card. And as many as 32% were not paying the balance off in full each month.

Compare the Market said this was the mostly costly mistake as it meant typically having to pay £194 in interest payments as a result.

Indeed, the latest figures from UK Finance showed outstanding balances on credit card accounts had grown by 9.4% over the twelve months to January and 50.5% of outstanding balances incurred interest.

Getting close to your credit limit

Spending to the point where you have nearly reached your credit limit is the next most common mistake, with 34% of respondents admitting to this.

Experts advise you should keep your usage to 30% or below if you are trying to keep your credit score in tip top condition and keep potential lenders on side. But this makes sense in terms of managing debt too.

The research also found almost a quarter of borrowers (24%) were using more than half of their existing credit limit. Compare the Market said consistently using a large proportion of available credit can reduce a borrower’s credit score.

Credit score

And, on the subject of credit score, the research also found as many as 20% weren’t keeping an eye on their credit score and 11 % were applying for multiple credit cards at once.

Compare the Market said applying for multiple credit cards at the same time could lower a borrower’s credit score as they will appear to be a greater risk to lenders. Almost half of borrowers (49%) also didn’t compare providers online when they took out their credit card which may mean they weren’t receiving the best rates or rewards for their circumstances.

Other mistakes included making late repayments, having outstanding credit card debt, and not knowing the interest rate (APR) charged by their credit card.

Andy Hancock, money expert at Compare the Market, said: “It’s important to not get caught out by common mistakes when using a credit card, which could cost you more in fees or interest repayments and have a negative impact on your credit score.

“If you can afford to, it’s always best to pay off your credit card balance in full every month. That way you’ll avoid having to pay interest.

“At the very least, you must make the minimum monthly payment. Setting up a direct debit payment could help ensure you pay on time.

“If you’re struggling to pay you might be able to reduce repayments, or prevent having to pay more interest, by switching from a standard APR card to a card with an interest-free period.

“You might also be able to save money by switching to a credit card with better rewards or by shifting debt from multiple credit cards to a single card.

“It’s worthwhile shopping around online and comparing cards to find one that best suits your needs and circumstances.”