A Guide to Using Credit Cards Responsibly

Credit cards are tricky. On the one hand, they can help you establish a credit history, increase your credit score and make you more attractive to lenders when you need to borrow money. However, it can be easy to get into debt, damage your credit score and hurt your chances of getting attractive offers for loans and lines of credit. It's essential to use credit cards responsibly.

If you're wondering how to use credit cards responsibly, take time to do your research before applying for a card. Find out what the common pitfalls are so that you can avoid them. Be a responsible cardholder and ensure a brighter financial future ahead.

Being a responsible credit card user means you don’t overspend, you use your card when you need to and you can pay it back. Don’t use your card for every purchase unless you can pay off your bill every month. If you treat it like you have an endless line of credit, you could get into more debt than you can handle, damaging your credit score and not being able to gain access to lines of credit and loans when you need them.

If you’re wondering, “What are the six ways to use credit cards wisely?” let MoneyGeek help you in your financial journey.

Take a look at the six recommended steps below. Consider exploring better habits, such as sticking to a budget, only borrowing what you can afford and regularly checking your credit score.

There are many reasons why you should use your credit card wisely. You may be wondering, “Will using credit cards responsibly increase your credit score?” The answer is yes. And, with a higher credit score, you can access more attractive lines of credit, loan offers and better interest rates. Responsible spending can bring you closer to obtaining your ideal mortgage or car loan.

If you don’t use your credit cards responsibly, the repercussions could be devastating. For instance, your credit score could be impacted, affecting your eligibility for attractive loan offers and lines of credit. At worst, too much debt could lead to account closure or bankruptcy. Here are some rules to follow for using your credit cards responsibly.

Before signing up for a credit card, look at the card provider's interest rate. Credit card interest is compounded daily. The higher your balance, the more your balance will grow.

If you get into debt, you will likely start receiving offers from companies that want to provide you with money to pay your debt. However, be aware that many debt settlement scams out there charge astronomical interest. Also, if you’re sending money to them and not your credit card company directly, you could accrue late fees and be sued for repayment.

If you have too many cards in your wallet, you may be tempted to use them all and spend more than you can pay back. Even if you’re receiving attractive offers, you should be hesitant to take on more cards. Plus, your credit card score is affected every time a credit card provider makes a hard inquiry into your credit report, although temporary.

You are not meant to spend up to your credit card limit. If every one of your cards is maxed out, your credit utilization ratio, which is the amount of debt you have compared to how much credit you can access, will be too high. Ideally, it should be below 30% at all times.

What is the main rule for using credit cards wisely? One of the most important things you can do is pay your card on time. If you pay late, you could hurt your credit score, especially if you are in serious delinquency and you end up going into collections.

There are many mistakes that people make when it comes to credit cards. Because it’s so easy to spend without thinking about it, it’s also easy to get into debt. It may seem like it will never catch up with you, but it will. It could be too late to get the problem under control by then.

Avoid credit card usage mistakes, such as maxing out credit cards, closing credit accounts, not paying attention to the fine print and applying for too many credit cards.

Consider the following common mistakes when using credit cards. Apply MoneyGeek's tips to managing your credit cards and preventing financial missteps.

There are many occasions when you should avoid using your credit card altogether. If you are vigilant about what you use your credit card for, you can stay away from debt and its negative impact on your credit score. Here are some times when you should not use your credit card.

There are several resources you can tap into when using your credit card responsibly. These resources are free and will assist you with increasing your score, paying down debt and, ideally, staying out of debt completely.

• Experian: Gain access to your credit score and report for free. Check for any purchases that you didn’t make so you can report them to Experian.
• TransUnion: Like Experian, TransUnion gives you free access to your credit report and score. Equip yourself with the right tools to free yourself from debt and raise your credit score.
• Equifax: The third credit report provider, Equifax, allows you to see your report and score for free, and they offer identity protection tools for paying members.
• Consumer Financial Protection Bureau: This free government resource will give you information on everything you need to know about using credit cards responsibly.
• Federal Trade Commission: The FTC government website will give you valuable information on credit card scams and the latest credit card news.
• Annual Credit Report: Using this government website, request your free credit reports, learn how to protect your identity and more.
• Mint: Are you trying to stay on top of your budget and limit your spending? The Mint app can help. See your spending and adjust as needed once you link this app to your bank accounts.
• Truebill: With Truebill, pay a fee and have the company negotiate your bills and get you refunds.
• National Foundation for Credit Counseling: This is the largest nonprofit financial counseling organization in the U.S. They can help you toward being debt-free.