How to Use a Credit Card Responsibly: 6 Tips

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Do you avoid using your credit card out of fear of overspending? What are some things you can do to minimize credit card liability?

Once you have a credit card you’re happy with, you need to learn how to use it responsibly. Otherwise, it’s all too easy to forfeit the benefits and wind up saddled with debts and fees.

Here are six tips on how to use a credit card responsibly.

Credit Card Tips

Credit cards have somewhat a bad rap: many personal finance gurus urge people (especially young people who don’t have financial stability) to stay away from them. But credit cards aren’t inherently bad—if you use them mindfully, they’re a great way to proactively improve your credit and get access to useful perks. Below are some tips on how to use a credit card responsibly.

1) Pay your bills on time, preferably in full. Even just one late payment can lower your credit score, raise your APR, and stick you with a late fee (usually about $35). You can bounce back from the occasional hit to your credit, but it’s best to avoid the issue in the first place by setting up automatic payments. If you do miss a payment, call the credit card company and tell them it was a one-time mistake and you’d like to have the late fee removed (make sure you’re telling them you’d like the fee removed, not asking if they can or will remove it). This works more than half the time. 

2) If you’re paying any fees, try to get them waived. Start by calling your credit card company and asking a representative whether you’re paying any annual fees or service charges on your card. If you are, tell them you’d like a no-fee account and ask them to waive any current fees. This works more often than you might expect, but if not, ask if they have a no-fee card that you can switch to. Credit card companies don’t want to lose your business, so they’ll work with you to find a solution.

3) Lower your APR. Again, this involves calling your credit card company. If you’re nervous about the idea of negotiating, keep in mind that credit card APRs are usually between 13-16% and can be much higher. Ideally, you’re paying off your balance in full every month, but if you’re not able to do that yet, your APR determines how much more you’ll end up paying in total. 

  • To make that more concrete: Let’s say you buy a $1000 smartphone on a card with a 14% APR. If you only make the minimum payments each month instead of paying off the balance in full, you’ll end up paying $732.76 in interest by the time you pay off the phone—so that $1000 phone ends up actually costing you $1732.76. You might occasionally need to use your credit card for a legitimate need that you can’t pay off right away, so lowering the APR as much as possible is crucial to limiting how much extra you’ll end up paying for that purchase. 
  • When you call, tell the representative that you want a lower APR. When they ask why, use one of two reasons: If you have no debt, tell them you’ve been paying your bill in full and on time for several months now. If you do have debt, tell them you want to begin paying it down more aggressively. In either case, make sure to mention that other cards are offering lower APRs, and that you don’t want to have to switch your business to a different company that offers a low-interest card. Offering you a discount is often cheaper for the company than having to sign a brand new customer, so they may work with you if it means keeping your business. 

4) Keep your accounts open and active. Credit history is an important part of determining your credit score—the longer you keep an account open and continue making on-time payments, the better your score. That means that keeping that account open will ultimately benefit you more than switching your main card every time you find a great introductory APR somewhere else. This is especially important if you’re planning to apply for a loan in the next six months because closing an account will slightly reduce your credit score.

5) Call your credit card company and get a credit increase—but only if you have no current debt. This improves your credit utilization rate, which is responsible for determining 30% of your credit score. Your credit utilization rate is how much of your available credit you’ve actually used, which we can calculate by dividing the balance you currently owe by your total available credit. 

  • For example, if you owe $1,000 and have $1,000 in available credit, you’ve used 100% of your available credit. But if you owe $1,000 and have $5,000 in available credit, you’ve only used 20% of the total available credit. The lower your credit utilization rate, the better your credit score, because you’re less at risk of defaulting on the card. 
  • You should only use this tip if you have no existing credit card debt because increasing your credit limit could tempt you to spend more and ultimately accumulate more debt rather than help you pay it down. 

6) Take advantage of your card’s perks. If you have a rewards card, you probably know that you can earn cash back and airline miles on your purchases. However, credit cards offer a host of other benefits, such as:

  • Automatically extending the warranty on anything you purchase on the card (meaning that even when the manufacturer warranty expires, you can still get repairs and replacements covered) 
  • Trip insurance to reimburse airline change fees 
  • Rental car insurance for damages up to $50,000
  • Concierge services that can help you get tickets to sold-out events 
  • Disputing charges on your behalf (for example, if your cell phone company charges you a fee even after you’ve negotiated out of it, your credit card company can often get the fee reimbursed for you)  
How to Use a Credit Card Responsibly: 6 Tips

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  • The small steps you can take towards living a "rich life"
  • How to choose the right bank account and manage your credit cards
  • How to create a financial system that grows your money automatically

Darya Sinusoid

Darya’s love for reading started with fantasy novels (The LOTR trilogy is still her all-time-favorite). Growing up, however, she found herself transitioning to non-fiction, psychological, and self-help books. She has a degree in Psychology and a deep passion for the subject. She likes reading research-informed books that distill the workings of the human brain/mind/consciousness and thinking of ways to apply the insights to her own life. Some of her favorites include Thinking, Fast and Slow, How We Decide, and The Wisdom of the Enneagram.

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