Essential Dos and Don’ts for Using Credit Cards Wisely
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Written by
Jeanine Skowronski
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Edited by
Levi Leidy
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Reviewed by
Jasmin Baron
Credit cards give you a great deal of spending power. For instance, the best rewards credit cards let you earn cash, miles or points on purchases, while a 0% annual percentage rate (APR) card gives you time to pay off a big buy without incurring interest.
However, to reap these benefits and avoid debt, you’ll want to use your cards wisely. That includes paying balances on time, choosing the right cards and understanding all of your cardholder perks. Consider these dos and don’ts as an essential road map for how to use a credit card.
Treat Your Credit Card Like a Debit Card
Avoid treating a credit card like found money (as in, don’t use it to pay for items you can’t afford).
Instead, “use it to automate fixed expenses,” said Eric Croak, a certified financial planner (CFP) and president of Croak Capital. “Think $200 in utilities, $150 in subscriptions, $400 in gas. Then set up autopay from a checking account with a cash buffer.”
That way, you earn rewards and build credit on essential purchases without racking up high-interest debt.
Pay Your Balance in Full and on Time Each Month
If you miss a monthly payment, you’ll likely incur a late fee and a penalty APR.
If you carry a credit card balance from month to month, you’ll pay interest on the outstanding debt — and that upcharge can quickly add up. Per the Federal Reserve Bank of St. Louis, the average credit card interest rate was 21.37% as of February 2025.
Both missteps — missing a payment and carrying a balance — can damage your credit score. The former affects your payment history, while the latter affects your credit usage, the two most significant factors among major credit scoring models.
Conversely, your “credit score will increase with responsible use,” said Leslie H. Tayne, debt relief attorney and founder of Tayne Law Group. Good credit has numerous benefits, including lower loan interest and access to high-quality credit cards.
Use Your Card To Maximize Rewards
There are many rewards credit card types. For instance, the best cash-back credit cards give you a percentage back on all or common spending categories, while travel credit cards offer bonus points or miles on airline, hotel or restaurant spending.
Choose a card that best aligns with your spending habits to rack up rewards without exceeding your budget. Also, consider a no-annual-fee credit card if you don’t spend enough to justify or simply wish to avoid the charge.
Other ways to maximize credit card rewards include leveraging welcome offers, pooling points across cards from the same issuer and redeeming rewards regularly so they don’t lose value to merchant or issuer changes.
Take Advantage of Card Benefits
Read your cardholder agreement carefully to fully understand your benefits. Top-shelf travel credit cards, for instance, often offer extra perks, including concierge service, airport lounge access, travel credits, trip cancellation insurance, lost or delayed baggage reimbursement, supplemental rental car insurance and other travel coverage.
Even non-travel credit cards can carry extra perks, like zero-liability fraud policies, price protection and extended warranties, that can get lost in their fine print.
“You’re more protected shopping with credit than debit,” said Stoy Hall, CFP and founder of Black Mammoth. “That’s a layer of financial armor most people overlook.”
Consider a Low-APR or Balance Transfer Card
These credit cards offer low-to-no APRs for a promotional period, usually 12 to 24 months.
Low-APR credit cards are an option if you need to unexpectedly finance a big purchase, while balance transfer credit cards help you consolidate and pay off existing high-interest card debt more quickly. (Keep in mind that transferring this balance typically costs a 3% to 5% fee.)
Both card types are best leveraged when you pay the purchases or balance transfers off before the promotional period ends. After that, the card’s standard APR accrues.
Apply Strategically
Applying for multiple credit cards in a short period can damage your credit score and signal to issuers that you’re a risky borrower.
Many credit card companies have also adopted unofficial approval policies to combat card churning (the practice of applying for multiple cards with welcome offers). These policies consider and potentially reject applicants who have applied for a certain number of cards in a given period.
Beyond that, “having a variety of credit accounts can be helpful and tempting in terms of rewards, but having too many cards can be difficult to keep track of, and your finances can derail quickly,” Tayne said. “Consumers should be selective about what credit accounts they open.”
Learn how to determine the right number of credit cards for you.
