The 4 Credit Card Rules That I Break All the Time

Rules are made to be broken, and that includes some of the most popular credit card rules.

The personal finance world is full of rules for using credit cards, and for the most part, it's good advice. I'd never argue against paying your credit card in full every month, paying on time, or only charging what you can afford.

Rules like those are smart for everyone, but there are others that aren't so set in stone. I've found that there are a few I break all the time. They've all worked out well for me, and depending on your situation and credit card goals, they may also work for you. Here are the credit card rules that I've broken.

1. Don't apply for too many credit cards

I'm what you could call a credit card enthusiast. I've applied and been approved for dozens of the best credit cards over the years.

The reason I do this is simple. You can get lots of benefits from different credit cards, including rewards, travel perks, and my favorite, sign-up bonuses that you earn for reaching a spending minimum. If a credit card company is going to pay me to open a card and use it for my regular bills, I look at it as free money.

There are risks to doing this, though. Applying for several credit cards in a short period of time can get in the way of building credit. And when you have multiple credit cards, you end up with more payments to manage, so it's easier to accidentally miss one or overspend and end up in credit card debt.

You can benefit from using multiple credit cards, but I'd recommend taking it slow. There's no rush, so you can gradually add to your wallet as you find new cards you like.

2. Use your cards regularly so the card issuer doesn't close them

This is the one rule I see all the time that has never been my experience. Out of all the credit cards I've had, I can think of only a couple that have been canceled for inactivity. It took more than a year of inactivity in each case, and every card issuer let me know in advance by email that I should use the card if I didn't want it to get canceled.

It's certainly possible for unused credit cards to get canceled. My philosophy is that the credit cards I care about are the ones that I use regularly. If a credit card company cancels a card I wasn't using anyway, it's not a big loss.

I think a good adjustment to this rule is to make sure you're using any credit cards you want to keep. That will be easy if you stick to cards you like that fit your lifestyle and spending habits.

3. Know your credit card's APR

If you quizzed me on the APRs for my credit cards, I doubt I'd get any of them right. The nice thing about credit cards is that if you pay in full every month, the interest rate doesn't matter, because you don't get charged any interest. In most cases, that's also the best way to use credit cards.

There are a few situations where it's important to know the interest rate details for your credit cards. If you're paying off credit card debt spread across multiple cards, interest rates are one way to decide which card to pay off first. Paying off the card with the highest interest rate first is known as the debt avalanche method, and it's the fastest, cheapest way to get out of debt.

If you need to carry a balance on one of your credit cards, then it makes sense to check the APRs and pick the card with the lowest rate. However, 0% APR credit cards are the better option here. They offer a 0% interest rate for an introductory period, and some offers last for a year or longer.

4. Be selective about credit cards with annual fees

Credit cards with annual fees get a bit of a bad rap. Experts are always recommending that you be cautious about cards with annual fees, since these add to your bills.

While there are great no annual fee credit cards out there, cards with annual fees usually have a lot more perks. If you can use these benefits, you'll likely get much more value out of the card than you're spending on the fee.

For example, there are several popular hotel credit cards with annual fees in the $100 range. Many of them include a free-night certificate, and it can be redeemed for a night that would otherwise cost much more than $100. If you stay at that hotel every year, a free night certificate alone is enough to make the annual fee worth it.

Remember also that opening a credit card isn't a lifelong commitment. If you don't think you're getting your money's worth, you can always either downgrade the credit card to one without an annual fee or cancel it altogether.

None of those credit card rules are bad, they just don't work for me. Credit cards can be a very useful financial tool, and to get the most out of them, you have to find the rules that work best for you.