A credit card can help you build a solid financial future and establish a good credit score, but it can also lead to a large pile of debt you need to pay off. Before you use a credit card, it’s essential to understand the various steps that will help you avoid problems later.


Although a credit card can help make purchases and earn rewards, it shouldn’t be used to buy things you can’t afford. Having a realistic budget will help keep you from getting carried away.

A budget that follows the 50/30/20 method will allow you to allocate half of your take-home pay to pay for necessities, such as groceries and housing, while the other half will go toward paying off debts and savings. This will help keep your credit card expenses aligned with your income and savings goals.

Monitor Spending

The first step is to determine how much you can afford to spend. After that, keep track of your monthly purchases using a credit card’s website or app. 

Once you reach your limit, stop using the card until you have paid off the balance. This discipline will help you build a credit score and avoid financial strain.

Do Not Max it Out

It’s tempting to carry a large credit card balance, but it’s essential to remember that carrying a large debt can negatively affect your credit score. 

One of the most significant factors affecting your score is your credit utilization, which is how much of your limit you’re using. Carrying a large debt can also set the foundation for a long-term financial problem.

Pay Your Bill on Time

The minimum payment you have to make on a credit card is only a portion of the total amount you owe. Paying the minimum payment may seem relatively low-cost, but it can cost you money over time. 

Paying the minimum each month will add interest to your credit card bill until you reach the end of the term. Your balance will decrease each month slightly, as a portion of your payment will be used to pay accrued interest.

Redeem Benefits

If you’re a new user of a rewards credit card, ensure you understand its terms and conditions. Using your card to shop for restaurants and gas can help you earn rewards points or cash back.

Keep your rewards from getting lost, as some cards have an expiration date, so you’ll have to use them or lose them. Some cards also have various perks you can redeem, such as a statement credit or a check.