4 Credit Card Rules You Should Never Break

by Christy Bieber | Published on Oct. 9, 2021

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A woman tapping her credit card on a payment reader being held out by a florist in a flower shop.

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Breaking these rules could be costly.

Credit cards are great tools for building credit and earning rewards for spending you would do anyway. They can make your life more convenient and offer valuable perks such as purchase protection or extended warranties.

But credit cards can also cause you a world of trouble. Here are four credit card rules to follow so that doesn't happen to you.

1. Avoid paying credit card interest

Credit cards typically charge high interest rates, with many cards offering an APR of 17% or more. You don't want to pay interest at such a high rate if there is any way to avoid it -- especially when there are cheaper borrowing options, such as personal loans.

If you're going to use a credit card, don't charge more on it than you can afford to pay back. If you must make a larger purchase you can't pay off in one billing cycle, consider using a 0% APR card or other more affordable loan to do it.

2. Always pay your credit card on time

Credit card companies report your payment history to the credit agencies. A positive payment history can help you earn a good credit score, which improves every aspect of your financial life. But a missed payment can stay on your credit record for years and damage your score dramatically that entire time.

To avoid damaging your ability to borrow, get a job, or rent an apartment, do whatever you can to pay your bills on time and avoid being 30 days or more late. If you are going to miss a payment, call your card issuer and find out what options you may have to prevent ending up with a negative mark on your credit record.

3. Choose a rewards program matched to your spending

Credit cards often provide valuable rewards. There's little reason to pass that up. Look for a card that provides rewards you're excited about, whether that's cash back, miles, or points to redeem for merchandise.

And try to find one that provides rewards for the spending you do the most. If you spend the bulk of your money on gas and groceries, for example, it's smart to get a card that offers rewards at gas stations and grocery stores.

4. Don't max out your credit cards

When you open a credit card, you're given a credit limit. That's the maximum you can charge at one time. Aim to stay well below it. Ideally, you should never use more than 30% of your available credit.

That's because card companies report how much of your credit line you're using, and this is a major factor in determining your credit score. If you max out your cards or your credit utilization ratio exceeds 30%, this can drag your credit score down and affect your borrowing ability.

Things can come up that make it difficult to stick with all four rules -- but, as much as you can, follow these rules to ensure your cards don't hurt your credit record. You want them to help, rather than hurt, your financial situation.

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