• Nate Jefferson

How to properly use a credit card

Updated: Mar 11



A credit card can be an important financial tool that makes life easier if you use it the right way. Here are some strategic ways to use your credit card so you can live a financially healthy life.

Step 1: Make payments on time

Your payment history is one of the major factors that impact your credit score. Missing just one payment could send your credit score tumbling down. On top of this, you’ll likely be charged a late fee. Nobody likes to lose money and see their credit score plummet. To prevent this, make sure you know when your credit card will be billed and be aware of your due date.

Step 2: Pay your bill in full each month

If you pay your credit card balance off each month, you won’t be charged any interest. However, this is not the case if you carry a balance to the next month. If you carry a balance, you’ll have the option to pay a minimum payment instead of the whole balance, but interest will be accrued to the balance on the card. If you continue to only pay the minimum payment each month and keep using your credit card, the amount you’ll have to pay back will continue to grow exponentially (this is the side of compound interest you don’t want to be on). It’s good to avoid this entirely by making sure you’re paying off your balance fully each month.

Step 3: Stay well below your credit limit

Credit utilization, or how much of your line of credit you have used, also has a considerable impact on your credit score. Typically, a high credit utilization hurts your score, and a low utilization has a positive impact on your score. It is best to keep your credit utilization below 30%.