Four Smart Credit Card Habits to Establish


Credit cards are a great resource when building your credit. Sure, they let you finance purchases and pay them off later, but they provide a much more valuable service — they allow you to build your credit file and establish a reputation as a responsible credit holder, which in turn can help you to qualify for loans, obtain better interest rates, and appear as a low-risk consumer whenever a credit check takes place.

Of course, credit cards must be managed responsibly to really benefit your credit and keep you in good financial standing. Follow these best practices and make them a habit to get the most out of your credit card usage.

Pay On Time

Of course, you have to make your monthly credit card payments on time. The consequences of late payments can include late fees, jacked up interest rates, and black marks on your credit report. Despite all this, it can be very easy to let a payment slip through the cracks.

To avoid missing a due date, you can set up automated payments to draw from your bank account on a monthly basis. If you aren’t comfortable with that, you can at least set yourself an automated notification on your phone, email calendar, etc. to remind you to make a payment on time, every month.

Pay the Full Balance

Sure, the minimum payment is enough to get by – and when you’re faced with other bills, the credit card may take lower priority. But the more you put toward your credit card balance each month, the less you end up being charged in interest in the long run. In this way, you’re actually saving yourself money by paying more now. What’s more, you’ll be able to pay down that balance even faster.

In fact, the absolute best way to use a credit card is to only charge what you can afford, and pay it off in full each month before the interest hits. This way, you never have to pay interest and you can still build your credit.

Maintain No More Than a 30% Utilization Rate

One major factor that goes into your credit score is your debt utilization. If you have a good portion of your credit card limit tied up with a card balance, this can damage your credit score and appear as a red flag to lenders.

It’s a good best practice to utilize no more than 30% of your credit card limit at any given time. This way, your utilization ratio won’t damage your credit score, and you have some wiggle room on your credit card in the case of an emergency.

Renegotiate Your Interest Rate

If you have several years of good consumer history with a credit card company, it may be time to try renegotiating your interest rate — most of the time, they aren’t set in stone.

Call up your credit card company, and be prepared to discuss your virtues as a customer — your years of being a loyal customer, the fact that you’ve never made a late payment, etc. If you can bring a competing offer from a rival credit card company to the table, you may sway them to cut your interest rate.

If they won’t play ball, another option can be to open a card with a better rate and transfer your balance to that card (provided you can get a good rate at another company).


Used responsibly, credit cards are an excellent tool to build your credit and power as a consumer. With these best practices, you can make the most of your credit card’s advantages, while minimizing the risk.

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