9 Useful Tips on How To Use a Credit Card Responsibly

Written By
Julija A.
July 05,2023

A credit card can be a useful financial tool, but if you don’t use it properly, you can end up with a huge debt on your account and a ruined credit score. To prevent that from happening and to learn more about America’s favorite financial product, read our guide on how to use a credit card and get the most of it.

What Is a Credit Card and How Does It Work?

Before getting your first credit card, it’s vital to know how it works and what its purpose is. 

A credit card gives you access to the funds you can borrow to pay for purchases and services. Credit cards look just like debit cards - pieces of plastic you can swipe or insert in a credit card reader to pay your bill. But, unlike debit cards, which are funded with your own money, credit cards are a form of credit. For this reason, each time you plan to purchase something with a credit card, you should use it responsibly because you’ll have to pay back the money you spent, plus a credit card interest. 

If you use your credit card with a dose of responsibility, it’ll bring you many benefits. The main advantage of a credit card is that you can pay later for the purchases you make now. Taking out more than one credit card can be tempting, but many consumers forget that credit cards come with fees and credit card rates that eventually must be paid. 

The smartest way to use a credit card is always to pay your balance on time. Most credit card issuers give a grace period of 20 or 30 days, during which your interest rate is paused. After the grace period expires, the interest rate starts accruing. 

You can either choose to pay the whole balance amount each month or make minimum payments. The worst thing you can do is skip due dates and avoid your payments. This will decrease your credit score and lead you to debt.

Another thing to be aware of is that each credit card has a limit. When you apply for a card, the bank checks your credit score, payment history, and income. Based on these parameters, the bank decides about your borrowing limit. 

Elements of a Credit Card

Before we move on to give you some advice on how to properly use a credit card, let us take a look at that piece of plastic. What information does it hold?

Credit cards have important information on them that should never be made available to third parties. On the front side, you’ll find the credit card holder’s name and surname, credit card number, expiration date, and the issuer’s logo. The back contains the CVV security code and the cardholder’s signature. For online purchases - for example, when you wish to make a reservation at a hotel - you’ll usually be prompted to provide your credit card number, expiration date, and the CVV code. 

Each credit card also has a unique PIN, a four-digit code for authorizing transactions, that should always be kept private from prying eyes. 

How To Use a Credit Card Properly - 9 Helpful Tips 

One of the best things about credit cards is that they are really easy to acquire and use. Compared to applying for a loan or mortgage, applying for secured credit cards is a lot less stressful and time-consuming procedure. The benefits of getting a credit card are diverse - from cashback rewards to credit score boosting - so it’s not a surprise so many Americans love them and have at least one in their pockets. Let’s see what you can do to make the best of them.  

Read your credit card terms and conditions

For responsible credit card usage, it’s essential to know all the details of the agreement between you and the financial institution issuing your credit card. Carefully read the customer agreement and get acquainted with the terms and conditions. 

You can find some of the information on the credit card company’s website, usually at the bottom of the homepage. But specific details about fees, payment dates, and borrowing limits can only be found in your agreement, so take your time and read it attentively before signing anything.

For those who want to learn how to use a credit card for the first time, the most important thing to familiarize themselves with is the annual percentage rate. APR is expressed as a percentage representing the total amount of money your credit card will cost you. It includes an interest rate and fees. Some credit card companies offer credit cards with a zero-interest rate, which is a good option if you want to be free of paying rates during the introductory period and focus on earning rewards.  

Note that credit cards have different APRs for various types of transactions. There’s the APR for purchases, which usually differs from the APR for balance transfers and cash advances. 

Stay up to date with your monthly statements 

Responsible credit card use is impossible without monitoring your credit. Each month, your bank will send a monthly statement to your email or mail address. It’s like a report that shows all the changes and transactions on your credit card during one billing cycle. For the sake of your healthy financial life, you should learn how to read a credit card statement and check those reports regularly. Here, we’ll list the most important elements of a monthly statement. Understanding them will enable you to use your credit cards in a proper manner:  

  • Allowed credit limit
  • Credit card balance
  • In-store and online purchases made during one billing cycle
  • The minimum payment you need to make
  • Payment due date

Your monthly statement will remind you of the last day to pay your debts without interest and of the minimum amount you need to pay each month. Thoroughly checking your card statement is also vital in spotting any suspicious activity on your account. If you find a purchase you didn’t make listed on your statement, you should immediately contact your bank and report unauthorized activity on your credit card. 

Make regular monthly payments

Probably the most important thing you should know if you want to learn how to use a credit card correctly concerns missing payments. Missed payments are the main reason some consumers get into debt, which, at some point, can be so large that they need to get a loan or enroll in a debt consolidation program to pay off their credit card balance. To avoid this scenario and keep your finances in good shape, make timely payments each month. Some credit card companies offer mobile apps with features that help you manage your finances by setting reminders or scheduling automated payments every month. 

Pay more than the minimum 

Every thrifty cardholder will tell you that using credit cards wisely means paying more than the credit card minimum payment. Timely minimum payments are a sine qua non if you want healthy finances, but the credit card company will also charge interest on the balance you transfer to the next billing cycle. The lesser that balance, the lower the amount of interest you’ll end up paying. 

Try not to reach your borrowing limits

Once you apply for a credit card, the credit card company will set your borrowing limit. It’s calculated based on your credit history, credit score, and your income. The better your finances, the higher your credit card limit. However, the best way to use a credit card is not to spend all the funds available to you because this can affect your credit utilization ratio. The credit utilization ratio is the percentage of the available credit you use. Keep it low if you want to have a good credit score. According to the Consumer Financial Protection Bureau, you should use up to 30% of your credit. If, for example, your borrowing limit is $1,500 per month, using just $450 or less of that amount each month will keep your credit utilization ratio healthy. 

Look for a credit card with rewards 

Reserved only for consumers with an excellent credit score, credit cards with a reward program are another example of using a credit card in a smart way. Cash back cards, or cards that help you earn airline miles or discounts for specific purchases, are a good solution for consumers who use their credit cards regularly. 

Use your credit card to build your credit score

By paying full monthly balances on time and spending less than your credit limit, you can boost your credit score in just a couple of months. Banks and other credit card issuers regularly send reports to the three credit bureaus, so you can track and monitor your credit score to check the improvement. It’s one of the most useful credit card usage tips, albeit one usually overlooked by consumers. Even if your credit score is 600 or less, you can qualify for a credit card with bad credit and use it to improve your score. Once again, the best way to use a credit card to build your credit score is to pay your balances on time. 

Spend money wisely

Once you get your credit card, decide how you are going to use it. Look at it as emergency funds. For example, if your car suddenly breaks down, you’ll have your credit card to cover the expenses. Just make sure you can cover the credit card balance next month.

An example of how not to use credit cards is to spend those borrowed funds on unnecessary purchases and generally, any luxuries you can’t really afford.

Report a missing credit card 

If you lose your credit card, it’s essential to report it as soon as possible to the credit card issuer. The credit card company will block your old card and replace it with a new one. The same applies if you think that someone stole your credit number, not your physical card.  


How do you properly use a credit card?


If you want to benefit from your credit card, you need to learn to use it properly. Our article explains in detail how to use a credit card wisely to avoid paying high interest rates and accruing debt. You can also use a credit card as a financial tool that can help you build your credit score and qualify for other financial products - personal loans, mortgages, and so on. For consumers who make most of their purchases with a credit card, credit cards with generous sign-up bonuses are always a wise choice.  

What happens if I don’t use my credit card?


Generally, the only thing that can happen if you don’t use your credit card is that the bank might close your account. Using a credit card responsibly and staying well below the borrowing limit will also improve your financial status and boost your credit score. 

How do I choose my first credit card?


With such an abundance of credit card offers, it can be tough to find the right one. However, when applying for a credit card for the first time, you don’t have as many options as customers with long credit histories. Before you start shopping for a card, check your credit score, payment history, and your income. Take the time to understand how credit cards work and learn how to use a credit card to your advantage. You can also try to qualify for 0% interest credit cards and save some money during the promotional period.

About author

Albert Einstein is said to have identified compound interest as mankind’s greatest invention. That story’s probably apocryphal, but it conveys a deep truth about the power of fiscal policy to change the world along with our daily lives. Civilization became possible only when Sumerians of the Bronze Age invented money. Today, economic issues influence every aspect of daily life. My job at Fortunly is an opportunity to analyze government policies and banking practices, sharing the results of my research in articles that can help you make better, smarter decisions for yourself and your family.

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