Jacob Sensiba
Aug 13, 2018 · 3 min read
“A lock in front of an American Express Business credit card.” by Ryan Born on Unsplash

A credit card, like a hammer, is a tool in your financial tool belt. If you use it carefully and responsibly, it may help improve your financial life.

But how do you use a credit card effectively? Are there certain rules I should follow?

We’ll learn that and much more in the following article.

Pay balance in full each month

Plain and simple. If you pay your balance in full each month, you avoid interest payments. If you avoid interest payments, you save money.

Take advantage of rewards

  1. Travel miles
  2. Cashback
  3. Hotel points
  4. Gas rewards
  5. Retail rewards
  6. Introductory rewards
  7. Earn points on a variety of purchases

I highly recommend going to NerdWallet to find the credit card best for you. There you can compare hundreds of different credit cards to find the one that meets all of our needs.

Track spending

Figure out where all of your money is going. If you are getting out of control with your purchases, it’s time to dial it back and just use the credit card for things you need. If you do this, you should have the money to pay it off right away.

Additionally, you need to make sure that the purchases showing up are ones that you actually made.

Regularly review credit report

You need to know what’s going on with your credit. Make sure you haven’t missed any payments, had any credit inquiries, or liens held against you. If anything on your credit report looks unfamiliar, you need to contact the credit reporting agency and figure it out.

They could have made a mistake and that could be hurting your credit and subsequent chances of getting approved for loans, other credit cards, etc.

Only close new credit cards

This has to do with your credit score. Don’t close credit cards you’ve had open for a long time. If there is a card that you don’t use, make sure it’s a newer one and won’t reduce your average credit age.

This is one of the factors for your credit score. The older your credit is, the better. This gives the agency a longer history when examining your credit. If they see 100% on-time payments and a credit age of 10+ years, you better believe that’s what they’re looking for.

Set a reasonable credit limit

If you don’t trust yourself to be responsible with your available credit, remove the temptation. Keep your credit limit low. You build up your credit history and lower the chances of digging yourself a big hole.

Only buy what you can afford

This goes along with paying your balance in full and tracking your spending. Here’s a good rule of thumb: If you want to make a purchase with your credit card and you don’t have money in your bank account to make that purchase, don’t do it. Make sure you have the money available before you charge anything with your card.

Don’t be late

Late payments are a HUGE no-no. This is the most important factor when determining your credit score. Even one late payment can drop your score 100 points (source).

Your credit score is so important! If you have a high credit score, you will be eligible for cards with better rewards and better perks, making it easier to be effective with your credit. Not to mention you’ll be eligible for better loan terms, credit offers, etc.

Extra credit card perks

In addition to cash back and travel miles, some credit cards offer additional perks, like free travel insurance and rental car insurance coverage, to name a couple.


If you trust yourself to be responsible and you can follow through with that, your credit card could be the most useful payment method in your wallet. Use the tips from above to set yourself up for success.

For more information about credit cards, how they can help you, and for our disclosures, visit www.crgfinancialservices.com.

Live Your Life On Purpose

Get Purpose. Get Perspective. Get Passion.

Jacob Sensiba

Written by

Husband | Father | Finance Nerd | Trying to improve the lives of those around me. Visit for our disclosures — www.crgfinancialservices.com.

Live Your Life On Purpose

Get Purpose. Get Perspective. Get Passion.

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