Here Are the 5 Best Credit Card Moves to Make in Your 20s

Using credit cards in your 20s can help you learn how to manage your money well.

If you're in your 20s, now is an excellent time to start making careful financial decisions. By learning how to manage your money early in life, you can set yourself up for success in adulthood. If you're looking for advice on how to best use credit cards in young adulthood, you're in the right place. These are the best credit card moves to make in your 20s.

1. Get a credit card to start building your credit

One of the best things you can do in your early 20s is to use credit cards. Some people in their 20s may steer away from credit cards because they've heard that they're dangerous. But if you use credit cards with care, they can help you build credit.

It pays to start building your credit early. Having a good credit score may qualify you for other financial opportunities in the future, like low-interest loans. If you're considering applying for a credit card, review our list of the best credit cards for young adults.

2. Pay your bills on time

It's always a good idea to pay your bills on time. But it's even more important to pay your credit card bills promptly. If you make late payments, your credit card issuer will charge you late fees. Extra fees like this can add up quickly.

Your payment history makes up 35% of your FICO® Score. For this reason, paying your bills on time matters greatly. Creditors can report unpaid payments to the credit bureaus once they're at least 30 days past due. If you want to avoid negative marks on your credit report, pay your bills on time.

3. Keep your credit utilization low

If you plan to use credit cards, make sure you don't use all of your available credit. For starters, the best practice is only to charge what you can afford. But your card issuer may give you a high credit limit or raise your limit as you show that you can manage your credit.

Your credit utilization ratio, or how much of your available credit you use, makes up 30% of your FICO® Score. Maintaining a low credit utilization can help you increase your credit score. Most experts recommend keeping your credit utilization below 30% for the best results.

Here's an example: If you have $5,000 in available credit, you'll want to use less than $1,500 of your available credit.

4. Never carry a balance

If you can avoid it, never carry a credit card balance. Instead, pay your entire balance on or before the due date. You may be tempted only to pay the minimum payment amount, but doing this is not good practice. That's because your credit card issuer will charge you interest when you carry a balance. As you accumulate interest charges, it can be too easy to fall into expensive credit card debt. Get into the habit of paying your entire balance every month to avoid falling into debt.

5. Hold on to your first credit card

The age of your credit history is another factor that makes up your credit score. Creditors want to see that you know how to manage your credit and that you've been doing it for a while. If you get a credit card in your 20s, hold on to that card so you can increase your credit history age.

If your first credit card has an annual fee and you can no longer afford to pay it, ask your credit card issuer to downgrade it to a no annual fee credit card. The account will stay open when you do this, and you can continue to increase the age of the account the longer you keep it open.

Don't let credit cards scare you. Credit cards can be a valuable financial tool if you know what you're getting into and make careful decisions. If you're still unsure which credit card is best for you, check out our list of the best credit cards.