If you have credit card debt, it is definitely important that you make paying it off a priority. However, how you pay it off is just as important as when. Below are the top five mistakes we all make when struggling with debt. Learning what mistakes to avoid from the beginning should help you deal with your debt and avoid ruining your credit score in the process.

Mistake #1: Canceling Your Credit Cards Out of Frustration

You are at or even over your limit on all of your credit cards, and instead of simply destroying them you call your credit card companies and cancel every single card. This is a great solution to stop spending, but could cause great harm to your credit score. Canceling all of your credit cards (and sometimes even just one) sends a big red flag to the credit bureaus that says you can’t handle credit. While you are overwhelmed now, canceling your cards isn’t the answer. Instead, call your credit card companies and ask them to set you up with a payment plan. Get under your limit, but don’t zero out your cards. If you can maintain a balance that is no more than 25% of your credit limit, your credit score will improve.

Mistake #2: Consolidating Your Debt

Paying one large bill has to be better than paying many smaller bills, right? For some people, absolutely; however, if you can avoid this do so at all costs! Fees are normally charged up front for services (adding to your current mound of debt), and companies can freeze your credit card and banking accounts. Worse yet, your credit report will reflect “third party assistance” when ran during the time you are using a debt consolidation service. If you need to pay off your credit card bills with one monthly sum, consider using the “waterfall” method of payment.

With this method, you choose a lump sum like $500 per month that you want to pay. You then take your card with the highest balance or highest interest (this is based on your priorities), and use the majority of your $500 per month toward that bill. You then put a portion of that toward your next highest priority card, a smaller portion to the third priority, and so on. Once you pay off your highest priority card, you add what you were paying toward that card to your second priority card. This allows you to pay off your cards quickly without skipping one card payment to cover another.

Mistake #3: You Are Paying a High Interest Rate on Your Credit Cards Without Questioning It

Sometimes you will be in a position where you can’t negotiate a lower interest rate with your credit card company. However, if you are in good standing, have good credit, and make regular payments above the minimum, you are in a position to potentially lower your rates. Recent studies show an average of 57% of people who meet the criteria above were successful in lowering interest rates by just calling his/her credit card company. Definitely motivation to give it a try! Simply call your credit card company, explain to them that you have been a good customer, and ask them if they would lower your interest rates for you.

Mistake #4: You Get a Home Equity Loan or Personal Loan to Pay Off Your Cards

In the short term this sounds like a great idea. Your credit cards are paid off, and you have peace from creditors. The problem is that debt has not gone away; it is just in the form of a loan now. Yes your credit card companies are no longer hassling you for payment, but you will still be getting a monthly bill from the bank and you will probably owe a larger minimum to them than you would on your cards. The problems really begin to arise when you have the loan payments and you don’t stop using your credit cards. Avoid this problem by paying off your cards without assistance from the bank.

Mistake #5: Month After Month, You Only Pay the Minimum Balance

When you choose to only pay the minimum balance on your credit cards, the credit card companies reap the benefits. At average interest rates of 15% - 20%, companies are raking in millions of dollars on your overdue payments and unpaid balance. It is understandable that you may not be able to pay off the entire amount in one payment, but always try to pay as much as you can to limit the interest you will pay in the future.

The Student Credit Cards Center provides guidance and advice on a student’s first credit card. When searching for your first student card, take time to learn about the pros and cons of credit, credit scores, and debt management from this and many reputable sites.