5 Ways to Use Credit Cards Responsibly

Use a Credit Card Responsibly to Build Your Credit

The credit card is one of today’s most essential financial innovations. Imagine being able to shop with just a piece of card and not have give cash at the checkout counter. The credit card is so incredible for its convenience.

But what some people don’t realize is that you are using someone else’s money each time they use a credit card. In other words, you go into debt. You use the card today and then you need to pay it back in a few weeks. If you fail to pay on time, your account starts to gather interest. The more you prolong the payment, the more your due bill balloons. This is the simplest explanation of how people fall into credit card debt.
And using credit card irresponsibly doesn’t just result to debt. You may face other serious financial consequences like foreclosure and bankruptcy down the road if you don’t try to remedy the situation.

On the other hand, using a credit card will result in certain benefits and advantages. Perhaps the most important advantage of all is the fact that it will increase your credit score. The higher the credit score, more financial opportunities become accessible to you. Lenders typically look at your credit score to determine whether you qualify for their financing products, whether that’s a mortgage, auto loan or another line of credit.
Therefore, using a credit card wisely will result in a series of positive impacts on your financial life. It increases your credit score and allows you to open new accounts or take on a loan with the best rates.

However, you don’t build credit overnight. You should use your credit card properly and responsibly each time and all the time. Here are the best tips so you know you’re using your credit card the right way.

Different Ways to Responsibly Use a Credit Card

Build Credit With Your Credit Card

So you’ve got a shiny new credit card and you’re excited to go shopping. Hold it. Plan those purchases wisely so you don’t end up ruining credit. The plan is to use the card in building credit.

There are a couple of key things you need to keep in mind if you want to build credit with a credit card. First, get one early so you can jumpstart the credit-building process. If you are unable to qualify for regular credit cards due to lack of credit history, you can apply for a student credit card, a secured credit card, a store credit card or have someone co-sign for you.

Use the credit card on your purchases so you can start establishing data on credit usage. However, you want to keep track of your spending so you don’t go over your credit limit. In fact, you should just use around 30% of your credit limit at any given time and pay off the balance right away.

Next, mind your due dates. Strive to pay off more than just minimum balance. Opt to settle the whole amount to keep interest at bay.

If you do these consistently enough over time, your credit health should improve.

Never Use More Than 30% Of Your Balance

You always have the option to spend as much as your credit limit allows, but that’s not a good idea. You should always strive to keep balance low, ideally at or below 30% of your credit limit. Therefore, if you have $10,000 credit limit, strive to keep credit use at or below $3,000.

Credit utilization rate takes a good 30% of credit score computation. For most lenders and credit issuers, going well beyond the 30% mark is a red flag that you’re overextending yourself. If you’re using way too much of your available credit, it is likely that you’re not managing your finances very well. The 30% rule is not a standard rule, but it’s a good guideline to ensure that you’re not overusing your credit. It is even better if you can use less credit against your credit limit.

You can bring down credit utilization rate in many ways. First, make sure to pay off your credit card bill early. If you wait for a couple of days and then forgot to settle it, your bill would have ballooned significantly, thanks to interest. After all, your credit card is still like a loan and it comes with interest as well. Paying your bill as early as possible is the best way to keep interest at bay.

It’s also good to track your spending on all of your cards. If one of your cards has been maxed out, and the others maintained 30% credit utilization rate, your score could still dip down. It’s also wise to pay for significant purchases right away. For instance, if you’ve booked airline tickets and accommodations using your credit card, settle that bill right away in full so you don’t have to deal with the stress of interest later on. It hurts if you pay the bill late, but there’s no problem at all if you pay it well before the deadline.

Be an approved user on spouse’s or parent’s card

Part of being responsible for credit card use is fixing bad credit. Having bad credit is such a nuisance as most times, you’ll end up with higher interest, lower credit limit or even being disqualified for a new loan or credit line.

Fortunately, there several ways to fix bad credit. One of them is to get a “child” card on another person’s account. It’s like piggybacking on someone else’s credit account so that the other person’s good credit records will reflect on yours. You, therefore, become an authorized user of such account.

This process is highly popular among young folks who have zero to little credit history. It’s also an ideal solution for people who may have long credit history but recently tainted with bad credit.

For piggybacking credit to truly work on your advantage, you must make sure that you are an authorized user of someone with good credit records. It could be of your parents, your spouse or any other person who you know very well. When that person pays his credit card bills on time, doesn’t leave a balance and responsibly utilizes his available credits, those data rubs on your account as well. Consider it getting a free ride for a healthier credit.

As an authorized user, you need to do your part as well. You must make sure to keep your purchases in check so you don’t go near the max limit.

Don’t Apply Too Often

Are you itching to apply for a new credit card? It is best to look at your current credit standing first before you do. Applying for a new credit card every so often signals desperation and probably financial distress. For most lenders, it’s a telltale sign that you may not be managing your finances properly, and therefore perceives you as a high-risk credit user. Applying for credit often in a short span of time also increases your chance of rejection.

It’s a different story, however, if you excellent credit standing. Lenders and credit issuers will view your credit application more favorably as you’re exactly the type of customer they’re looking for.

Therefore, you want to show credit issuers that you want a new credit card, but you don’t really need it. Your applications should be spaced far and few in between to demonstrate that you’re not desperate for new credit. Importantly, you shouldn’t apply for a new credit card if you plan to apply for a mortgage or car loans or any other type of huge loan in the next few months. Doing so can result in a profound impact on your credit score. Take your time to shop and don’t rush your applications.

Ask For Increases Every Few Years

If you feel like you can manage a higher credit limit, you can request for it. However, you must do it the right way.

First, you can talk to your credit issuer about your desire to increase the credit limit. Build your case, but don’t sound desperate. You can point out that you’ve been a loyal customer for quite some time, and you have stellar credit records – you pay your bills on time, you pay more than the minimum (preferably pay your bill in full) and you spend less than 30% of your credit limit. It also helps to point out if you’re income has recently increased.

When you do this, the issuer pulls out your credit report to take a look. This can slightly hurt your credit score. However, if you’ve asked a couple of other credit issuers for a credit increase and they all pulled out your report, your score can dip down significantly.
Getting an increase in your credit limit is a matter of the right timing. If you can show you deserve it without having to look so desperate, it is very likely you’ll get it.


Responsibly using your credit card is the cumulative effect of wise judgment and decisions. You have to consistent with these habits. You can’t just pay your bill on time this month and then miss it next month. Your credit card has given you a convenience and power to make purchases without the physical cash, but abusing it can lead to serious financial consequences. Use your cards wisely today and your finances will be in much better shape down the road.

Disclaimer: Content found on loanreviewhq.com has been created to be used for informational purposes only and help readers achieve a basic understanding of their finances and financial options. The content is not intended to replace or usurp financial advice from professional accountants, CPAs, etc. If you you’re seeking financial advice, always present any questions you may have regarding your finances to a professional. Never disregard professional advice because of something you read on the internet.

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