How to use a credit card

When using a credit card for the first time, the goal is to spend within your means and pay the account on time and in full every month in order to build credit and prevent costly interest charges. A credit card, when used wisely, can be a strong instrument that saves you money in the form of incentives and interest in the long run. However, if you are careless with it, you may end up with credit score harm and debt that will take years to recover from. So, how should you utilize your credit card? We’ll look at many ways you can put your card to work. We’ll also provide you with some pointers on how to use your card to avoid incurring excessive debt or badly harming your credit.

Credit cards are amazing: they allow you to make purchases anywhere in the globe and then pay off the balance over time. Credit cards can also provide bonuses and rewards. This includes, among other things, interest-free periods on debt transfers and purchases, cashback, loyalty points, and air miles.

How to Make Use of a Credit Card

Credit cards, when used incorrectly, can lead to debt, destroy your credit rating, and make it difficult to obtain competitive credit cards in the future. So, to make sure your credit card remains a friend rather than a burden, here’s how to use it correctly:

  1. Before applying for a credit card, do your homework.
  2. Pay all of your bills on time.
  3. Spend up to your credit limit.
  4. Do not use your credit card to obtain cash.
  5. Pay more than the minimum amount due.
  6. Pay down your highest-interest obligations first.
  7. If you’re having trouble paying off debt, consider a balance transfer card.
  8. For large transactions, use a credit card.
  9. Check the costs before using your card in another country.
  10. Use a cashback or reward card to its full potential.
  11. Use your credit card with caution and security.

#1. Before applying for a credit card, do your homework.

If you haven’t already applied for a credit card, follow these golden rules to ensure you obtain the best card for you:

  • Examine your credit history. It is recommended that you thoroughly examine your information with all credit reference bureaus to ensure that all information is present and proper. Most organizations (Experian, Equifax, CallCredit) provide a free trial period during which you can acquire your record at no cost. However, if you no longer require their services, remember to terminate your subscription. If you discover any irregularities, you should immediately contact the relevant authorities and request that the error be corrected (they may need proof that the information is incorrect).
  • Make no more than twocard applications in a row. If you do, your credit history will be tainted, making it much more difficult for you to obtain competitive credit in the future. If you are doubtful about your prospects, you should conduct an eligibility check ahead to determine your odds of acceptance without harming your credit score.
  • Check out the different credit card interest rates. Many (but not all) credit card companies give alternative offers for consumers who do not qualify for the card they applied for. As a result, the card will typically have a shorter interest-free period and a higher APR. With this in mind, it may make more sense to apply for the card that you actually need rather than the best balance transfer or purchase deal. For example, if you believe you can pay off a bill in 25 months, you should apply for a card that allows you to do so. Rather than applying for a top 36-month card, being turned down, and then being offered a card with only 18 months interest-free and a higher APR.
Read Also: Best Business Credit Cards For Bad Credit In 2022

Here are some advice, tips, and warnings to keep in mind once you’ve got your card and are ready to use it:

#2. Pay all of your bills on time.

If you miss even one payment, your introductory interest-free offer will be terminated and you will be required to pay any leftover balance at the usual APR. Late payments will result in fines as well as a negative impact on your credit rating. Set up a direct debit as soon as you receive your credit card to eliminate the possibility of this happening. This ensures that your payments are always made on time. If you don’t like direct debits, several credit card companies provide free SMS alert notifications.

#3. Spend up to your credit limit.

Your credit limit will be communicated to you when you receive your credit card. If you exceed this limit, even by a modest amount, you will immediately lose any introductory deal and your credit score will suffer. In an ideal world, you would spend on your card, then pay it off before spending again, but that is not always achievable in real life. Most credit card companies allow you to set up email or text notifications to notify you when you are approaching your credit limit.

#4. What should you not do with a credit card? Cash.

You may be charged a cash advance fee if you use your credit card to withdraw cash (including foreign currency). This can be as much as 4% of the amount withdrawn, as well as an increased APR until the loan is paid off. It is rarely worthwhile. Consider getting a money transfer card if you need to withdraw cash. There will still be a cost, but you will benefit from a time in which you will not be required to pay any interest on the funds. This provides you more time to pay down the balance.

#5. Pay more than the minimum amount due.

If you’re paying off a credit card bill over time, always make an extra payment each month. If you don’t, it will take years, if not decades, to pay off your balance because the majority of your payments will be eaten up by interest. For example, if you had a £1,000 card bill with an APR of 19.9% and only paid the minimum payment each month, it would take 18 years and 5 months to pay it off. If you paid £50 per month, the balance would be paid off in 2 years and 2 months.

#6. Pay down your highest-interest obligations first.

If you have more than one card (or other sorts of debt), it makes financial sense to pay off the one with the highest interest rate first. Of course, you must remember to make the minimum payment on the card with the lowest interest rate each month.

#7. If you’re having trouble paying off debt, consider a balance transfer card.

If you’re having trouble paying off a credit card amount, consider applying for a balance transfer card with an interest-free term. During this time, you can pay down your balance without having it eaten away by interest payments. Balance transfer fees are virtually usually charged on longer-term cards. There are a variety of ‘no-fee balance transfer cards to select from if you are confident you can pay off your debt in a shorter term (or are willing to trade again after the interest-free period has gone). If you still have a balance at the end of the interest-free term, you can always look for another balance transfer card if your credit history is good enough.

You could also apply for a card with a low APR. There is usually no balance transfer fee with these cards (but always double-check), and the APR will be at a more manageable level for you to pay off your balance.

#8. For large transactions, use your credit card.

Even if you have another means of payment, use your card to purchase large-ticket items costing more than £100 but less than £30,000. You will benefit from Section 75 (Consumer Credit Act 1974) protection that credit card payments have. If the things you purchase are faulty, not as represented, or you do not receive them, you can seek reimbursement from your credit card company. Even better, choose a 0% purchase card and take advantage of the interest-free time it provides.

#9. Check the costs before using your card in another country.

Many traditional credit cards charge fees for cash withdrawals and/or transactions in foreign currency. When you think how many times you pay for anything on your travels, these fees can quickly add up – and the bill shock when you return home can be gloomy. To avoid these fees, consider a dedicated travel card, which may offer free overseas cash withdrawals, fee-free foreign purchases, or both.

#10. Use a cashback or reward card to its full potential.

If you have a cashback or reward card, you can maximize your return by utilizing it for all of your routine purchases. This covers your weekly grocery, gas, and online purchases, even if you regularly pay with a debit card. However, you must ensure that you are able to pay off your credit card bill in full each month, as any interest charges will wipe away your gains.

#11. Use your credit card with caution and security.

If you have a credit card, make sure to take the following precautions to keep yourself secure and prevent unauthorized use of your card:

Check your credit card statement on a regular basis. Check your statement online or on your mobile device at least once a week to ensure that all incoming payments are real. If not, call your credit card company right away. If you have been a victim of fraud and have been diligent with your login information and PIN, it is very likely that your credit card issuer will compensate you in full.

When you use a public computer to access your online banking, always log out entirely and, ideally, remove your browsing history and cookies as well.

Cutting up your credit card does not result in its cancellation. Your account will be kept open, but with no balance. The best option is to write to your bank and indicate that you want to terminate the account, call them, or go to a branch.

How do you pay with a credit card?

Simply produce your card at the checkout counter of a restaurant, grocery store, or shopping center and pay for your items. The clerk will scan or insert your card into a machine and prompt you to enter your PIN (a secret code that only you know).

Should I pay off my credit card after every purchase?

Always settle your credit card debt in full if at all possible. Credit utilization rate, which is affected by keeping a balance from month to month, is a component in determining your creditworthiness.

How much should I use my first credit card?

Your credit limit can be increased at any time after you receive your first credit card. Always pay your monthly credit card bills in whole and on time, and keep your balances below 30% of your available credit to boost your chances of getting approved for a limit increase.

Credit Card Credit Building, Rebuilding, and Maintenance

Good credit is essential. And using a credit card properly can be a terrific method to build building credit, rebuild credit, or maintain a strong credit score.

There are credit card possibilities for you no matter where you are in your credit path.

Credit Card Options for Credit Building and Rebuilding

Consider a student credit card or a secured credit card if you’re seeking to develop or rehabilitate your credit.

You might also explore becoming an authorized user on the credit card account of a trusted friend or family member. Because many credit card issuers report authorized user activity to credit agencies, correctly using your credit card could help you build or rebuild your credit.

Can I use my credit card the same day I pay it off?

Yes, you can use your credit card again if you pay it off early. When sufficient credit is available, a credit card may be used to make a transaction.

Credit Card Alternatives for Good Credit

You may have even more credit card alternatives if you already have an excellent credit score. And those options may even include additional benefits. Using your card responsibly, for example, could help you earn cash back or travel points.

Pros of Credit Cards

  • Credit cards are more convenient to carry and use than charge cards and prepaid cards. If your card is lost or stolen, simply call your bank and cancel it. If it was stolen and used fraudulently, you have a considerably better chance of getting the money back.
  • It may be a less expensive way to borrow if you pay off your outstanding balance in full each month. Some credit cards, however, provide an initial interest-free period on purchases. However, it is critical to understand when your interest-free period ends and whether any type of spending does not count at this time.
  • You’re safe – with credit cards, you’re covered for most purchases over £100 and up to £30,000 under Section 75. So, if you book a vacation and the supplier goes out of business, your credit card company should refund the expense, even if you only placed a deposit with your card. If section 75 does not apply, you may be protected for purchases using the ‘chargeback’ mechanism, although chargeback is not a legal entitlement (unlike Section 75).
  • Freebies, such as air miles, reward points, and cashback, are frequently offered with credit cards. However, it is critical to never choose a credit card solely for its ancillary advantages.

Sticking to your credit limit and paying your credit card amount in whole each month can increase your credit score. However, even missing a single payment will harm your credit score. As a result, it’s critical that you don’t get behind on your payments.

Credit Card Cons

  • High-interest payments – if you don’t pay off your balance at the end of each month (and you’re not on a 0% program), you’ll have to pay interest on the amount you owe. This can be significantly pricier than other types of borrowing.
  • Beware of the debt spiral – if you skip even one payment, the interest will begin to mount. You can quickly fall into debt if you don’t pay off what’s owed each month, especially if you keep using your credit card.
  • Can harm your credit score – Missing a payment or exceeding your credit limit can severely harm your credit score. This may have an impact on your ability to borrow money in the future.
  • Additional fees – In addition to interest, you may be charged additional fees or penalties for exceeding your credit limit or skipping a payment. Withdrawing cash normally carries a higher interest rate, and certain credit cards may additionally levy an annual or monthly fee.
Read Also: How To Make Credit Card Charge Dispute: Processes and Limits
  • Deposits and pre-authorizations might reduce your credit limit – for example, hotels or vehicle rental companies may use your credit card to obtain a pre-authorization. This is so they can charge you if you don’t pay for stuff like the mini-bar. They will place a hold on a portion of your credit limit, say £500, and that amount of credit will be unavailable to you while the hold is in place. Even once they remove the hold, it may take a few days for your credit limit to return to normal.
  • Expensive to use overseas – This varies greatly depending on the card. Some are intended for travelers, while others are more expensive in terms of fees and other costs. This is determined by whether the card is used for purchases or cash withdrawals. Look around for the best rate cards for use abroad.


Some people find it difficult to use their first credit card responsibly. However, after you’ve mastered it, consider the difficult portion completed.

On the other hand, try not to be concerned about the practicalities of using your new credit card for the first time at a store or online. Throughout the procedure, you will be given numerous prompts that will instruct you on how to use your credit card.

Finally, when you use your first credit card and build your credit history, keep an eye on your account for any questionable activity by reviewing your monthly statements for unauthorized transactions. It’s also critical not to give up your credit card or PIN over the phone unless you’re phoning the issuer’s customer service department directly. Remember your passwords and PINs, or write them down and put them in a secure spot, to keep your critical information extra-protected.

How To Use Credit Card FAQs

Can I withdraw money from credit card?

Simply go to an ATM and withdraw the cash you require, up to the limit set. It does not require any specific authorization from the bank. And you repay it, together with the fees associated with cash withdrawals.

How much should I pay my credit card?

Pay the full balance or as much of the balance as you can afford when it comes to credit card payments. If you’re trying to pay off multiple credit cards, pay as much as you can on one and the minimum on the others.

Is it better to pay your credit card early?

This not only ensures that you are spending within your means, but it also saves you money on interest. If you pay your whole statement balance by the due date every time, you will keep your credit card grace period and will never be charged interest.


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