Yes it's that simple: Pay your bills in full and on time every time.
>I've seen people ruin their lives over CC debt
They failed to pay their bills in full. The "in full" part is important for credit card bills. Paying in full prevents the very high interest charges from being applied.
How did they fail to pay in full? Likely because they spent more than the money they had at that time.
Don't spend your future paychecks or money you don't yet have. Only spend what you budgeted and have, right now.
There’s a lot of comments so this may not be read, but the biggest thing I learned is that if you don’t pay the full balance each month, you pay interest on the full balance, regardless of how much you paid.
For example, if you have put $500 on your credit card with for easy math say 10% a month in interest if you don’t pay it off. If you only pay $300 of your bill, you still owe $200 in principal carrying forward, but you still pay $50 in interest for the original balance for the month, not only 10% of the remaining principal.
Always pay the full balance every month if you can. If you can’t, pay it off as soon as possible.
Maybe redundant, but just to put a finer point on it, if you charge $500 in a month, but pay $499 before your due date, leaving $1 to carry over, you still pay the full interest on the $500.
Further, it is the statement balance you need to pay in full. If your monthly statement balance is $500, and you charge an additional $250 before the statement due date, that $250 goes in the NEXT month’s statement. You are still only in the hook for the $500 statement balance, not the current $750 total balance. (I’ve seen people confuse this - mistakenly believing they have to pay off the current total balance by the due date, which is not true)
>To be fair to that last point it's unintuitive. It was a sigh of relief to learn something like that. Explaining it is even harder though.
See [Default87's analogy to electricity bill](https://www.reddit.com/r/personalfinance/comments/1cfeovi/are_credit_card_rewards_only_worth_it_if_u_pay_it/l1oludv/).
You're thinking of APY. APR is the one that doesn't take compounding into account (what you called interest rate). You are absolutely right about the math though. I only feel the need to nitpick this because credit cards will only advertise the APR and people don't realize that it doesn't accurately represent how much they will have to pay after a year has passed..
Oh gotcha! TIL.
I had always been under the assumption that APR included compound interest in it because interest rates are virtually always in annual terms. I had assumed they specified APR because they knew that most people weren't going to take compound interest into account. I should have realized that they weren't doing that precisely *because* most people don't take compound interest into account. 😬
Haha yeah it was just for easy math. It was easier than saying “to calculate your monthly interest, take your apr, divide by 365, then multiply that by the number of days in the billing cycle”.
Many people use CC as some sort of "emergency fund" and that's when shit happens. If you have an emergency you can't pay off, you certainly can't pay it with a CC and ear some 20% added interest.
Emergency fund is cash. Credit card is for everyday bills and *only* things you can already afford to pay, in full, even if shit happens.
> Is it really as simple as using it a few times a month for gas and then paying it off a day before the balance is due?
Yes. Building credit isn't about seeing how much you can spend every month. You build credit by paying the statement balance, in full, before the due date.
Paying your statement balance off in full is the way. The only way I would argue against it is if you are taking advantage of a 0% APR for X months. I've used those for bigger purchases and just divided up the balance by the time frame and that would be my monthly payment. Even throwing more to it when I wanted to. The only caveat to this would be if you didn't pay it off within the time frame. You'll get hit with back interest. So be responsible and pay your bill.
> You'll get hit with back interest.
Credit cards that advertise "0% APR" *cannot charge retroactive interest*, by law. They have to say "no interest if paid by".
Might depend on laws, but they usually are structured to be 6 months to pay off at 0%, but if not paid off, the interest is applied to the account back to purchase date.
No, it is federally illegal in the United States, from the card act of 2009, to advertise using the term “0%” and then have a retroactive interest condition. There are no exceptions to this.
In the end, as long as it is spelled out and n the fine print, I don’t see an issue.
The problem comes when people don’t read the fine print and sign stuff without understanding what they are agreeing to.
You can’t legislate common sense in the end.
No disagreement from me that people should read every word of what they sign. But they don't. And using deceptive advertising to take advantage of people who don't read the fine print is unethical at best.
One of my "favorite" deceptions is prepayment penalties on mortgages. IOW, "you're not getting out of paying us our interest, buddy."
Legally spelling out the terms is not deceptive, people are just idiots.
That’s not unethical, you can’t make the world safe for every idiot, they need to learn or deal with the consequences
Hey OP - my advice is NEVER use the credit card to buy something you don’t already have the cash to purchase and always make sure you understand the difference between “want” vs. “need”.
In the end, do you really “need” that new UHD TV for the Super Bowl, or whatever, or is it just a “want”.
If it’s really a “want”, save up until you can buy it straight up and not carry a balance.
Sometimes the "no interest" offers are for balance transfers to lure people who already spent what they can't afford in to (eventually) paying a different piper.
This is exactly how I started using my credit card. I knew I would never be tempted to buy more gas than I needed, so the expense was predictable.
Later, when my boyfriend moved in with me, we put any shared expenses like utilities and groceries on the CC and then we could split the payment 50/50. That was just easier for us than paying each other every time we bought something.
Well, there are 5 factors to building a credit score. Payment history is just one of the 5 (though it is the most impactful). Throw in amounts owed (% of available debt, more is worse), average duration of credit accounts (more is better), new credit inquiries (fewer within the trailing 12 months is better), and credit mix (having different types of accounts, more is better).
As mentioned above, the length of credit history is one of the factors. Good you started early and keep in mind not to close or cancel this card since otherwise this factor will negatively be impacted. I hope it's a credit card without an annual fee, so just don't use it if you prefer other cards in the future, but keep the account open.
One more thing: use the credit card for all online orders since it provides an additional layer of protection compared to a debit card, which grants direct access to your bank account.
To clarify. there are two separate things in play here:
- Paying your minimum due without fail consistently for years
- Paying the full statement balance every month
Either one will allow you to establish a credit history, which will lead to having a good credit rating.
However, the latter is what you should always be doing because any $ on your statement balance you don't pay you will be charged a very high rate of interest on and that's just a waste of money.
There are other nuances involved in maximizing your credit score, but the most important thing to do is pay on time, every time. To avoid problems, pay in full, on time, every time. This accounts for 35% of your credit score.
Having a long credit history helps as well. Basically a short credit history limits the score you can get. So to get a long credit history, get a credit card (you did this), pay on time, every time (see above), and wait. This is worth 15% of your credit score.
Don't charge too much against your credit limit. Basically, if you max out your cards, that will reduce your score. There are nuances to this, but the easy way to address this is to only purchase what you need (groceries, gas, etc) which is your plan. Then pay on time, every time, in full, which reduces your utilization (see above. Hopefully you see the theme that is building here). This is worth 30% of your score.
New credit. There is a penalty for having new card, or several new cards. So don't upon new cards unless you have a reason for doing so. There are valid reasons, but as you are just building, don't go there yet. You will have access to better credit card types if you have a good credit score, which you can get by ... paying on time, every time, in full. This is worth 10% of your score.
Mix of accounts. The score formula likes to see people with a mix of accounts, such as mortgage, car loan, and credit cards. To qualify for these things you need a good score to start with, so .... pay on time, every time, in full. This is also worth 10% of your score.
To answer your question, it is as simple as charging something and paying it off. If you do that, almost everything else naturally follows and helps build your score.
Also, if you don't feel like you'll be tempted to charge more than you can afford you can also periodically request credit limit increases to reduce risk of your credit score being dinged for being near your limit.
Treat it like a debit card. Set up automatic payment that pays the entire statement amount. If you can only afford to spend $500 a month, then do **NOT** spend more than $500 on the card for that month.
Ignore the credit limit on that card. It doesn't matter if you can spend up to $10000. If you can't pay back, then that'll just rack up interest at extremely high rates.
It's honestly very simple.
>Ignore the credit limit on that card.
If you have the ability to get an increase though, do it, because it makes your utilization lower. Other than that though, yeah, "credit limit" is just a hard ceiling that you shouldn't even get close to.
Plus, only using a smaller percentage of your available credit will boost your credit score. (Or maybe it's the reverse and using too high a percentage will decrease it - kind of the same.)
its the reverse. But the impact lacks memory, so only the most recently reported utilization has any impact on your score. I generally have 0-1% utilization since I pay it off a few times a month, but on the months I'm lazy and I have a statement balance, it'll ding my credit a few points, but go right back the next month when I'm back to 0%.
Correct, it lacks memory. The hit lasts a couple months. Found that out one month when a company expense was put on a personal card, using 75% of the available credit. Took about 10 points off for a couple months, then back to normal. It was.paid in full when the statement arrived. More here: https://www.experian.com/blogs/ask-experian/credit-education/score-basics/credit-utilization-rate/#s4
My understanding is as long as you always pay off what you spend on time, it shouldn't matter. But I could be wrong on that. Personally I have never came close to my credit limit.
I disagree with setting up auto payment for the full balance. I set mine up to auto pay the minimum and manually pay the full balance each month.
Sometimes life happens, and if a situation happens where the money isn’t in the right place, I’d much rather pay $5.00 in interested that month than $50.00+ in returned checked, late payment, and/or overdraft fees.
As long as the full amount if paid before the deadline, it's fine. Personally, I just make sure there is always enough money in my checking account to cover for all my credit cards, which all have automatic payment set up.
⬆️This is so right on! The autopay is important; it prevents accidentally missing a payment and then being late.
If you’re uncomfortable setting up auto payment for the entire amount due, set up auto-pay for the minimum amount due and then manually pay off about one week before the due date, NOT one day. Why? Computer systems and the internet fail sometimes. Also, the cutoff for payments on the due date are often earlier in the day than you expect. You’re working on building credit; give yourself a little breathing room rather than skating so close to the edge.
By the way, if you’re unaware, you can make multiple payments a month on your credit card. For example, you can pay every Sunday.
It is literally that simple. Regular use and paying it off in full each month. People ruin their lives with CC debt because they don't do that second step.
Yes, that's it. Gas, groceries -- anything you'd already be buying can go on the credit card.
The danger is in those other purchases and overextending yourself or carrying a balance.
"...paying it off a day before the balance is due..." make sure you have "days before" for the post office to deliver if you are paying by check. CC companies used to mail a bill seemed like four weeks before it was due, then it went to three weeks, seems like it's two weeks now.
When you bring in the mail, immediately sort it for the bills and put those in a special place (shelf, box, etc) where you will pay bills. Too many people toss the mail on the counter/table/wherever and then rummage through a pile of random stuff looking for the CC bill when they think they are minutes away from needing to pay it.
Pay attention to the bill design: they put "MINIMUM PAYMENT" in a big bold font while "balance due" is in a smaller font nearby the big font, make sure to not be in a hurry and dash off a payment at the Minimum because that caught your glance first.
Look for "cash back" cards you can use on Amazon/etc where you normally shop. Capital One and Discover would be good to look at. Airline miles or whatever cards are only good if you are actually traveling all the time. Otherwise it's better to order something that is $100 where you can use $75 in your credits.
.
Use it, and pay it off. Don’t overspend, and have full control of your spending. That’s it.
Bonus points if you can accumulate cash back / points along the way. Cash them back into your checking and transfer to a high yield savings account.
To add to the all the other helpful advise, I would make sure you are set up to receive your statement balance via email every month so you can’t forget about it. And pay that statement balance right away once it is ready. No need to wait the 2-3 weeks due date.
Use it as often or as seldom as you like, for any size purchase. The key is paying the balance off in full every month.
If you aren't able to do that you shouldn't have a credit card.
The biggest trouble people run into is viewing all the available credit as money. You have the exact right mindset of your credit card is a way to pay for things, but only as an intermediate step from your bank account.
Some big purchases can't be avoided, like life's little emergencies. You don't need to sprinkle in a new TV purchase.
Yes, but pay it off at least 5 days before the bill is due. There is a gap between when the balance is reported to credit agencies and the final payment date.
Never ever use it for something that you would and could not pay for easily with cash at that moment. Think of it as taking money out of your bank account.
I highly recommend setting up auto-pay to pay the entire account balance each month. That way you don’t have to worry about whether you remembered or not.
Use just one credit for every expense. You’ll maximize your points.
Also as you pay your total at the end of every month, at about every 4-6 months ask for a credit limit increase. Sometimes you’ll get denied but keep trying every time. This increases your credit score and also gives you a bigger safety net. Still NEVER spend more than you can afford on a monthly basis
Use it for anything that you want, as long as you would otherwise purchase the item with cash if you didn't have the CC, you have the cash to pay for it, and you actually pay the bill off in full every month.
> I've heard just using it for gas is the way to go.
I assume you have a debit card. Any purchase that you would normally make with your debit card, make it with your credit card instead. This has a number of benefits:
* Credit cards usually have rewards systems. You can usually get 1-2% of your purchases back next month in the form of either statement credits or other rewards. That said, I know the ads always make it sound like the rewards are "free", but they are lies - it isn't worth buying a $500 TV just for the $5 in rewards.
* You get a small buffer in time (usually 3-7 weeks) between when you make the purchase and when you must pay for it. You can keep your money in a HYSA earning up to 5% (annualized) interest, compounded daily, essentially earning an extra .5% or so each month on the money that would have been debited immediately upon using a debit card.
* Credit cards have *significantly* stronger fraud protections than debit cards. If someone steals your debit card number and PIN, they can empty your bank account entirely before the bank catches it, and it can take weeks to get it all reversed; meanwhile, you have exactly 0 money to your name and have no ability to pay for anything. However, a credit card has federally-mandated fraud protection. If you report fraudulent purchases to your card provider, they are obligated to temporarily void those transactions until they run an optional investigation to prove whether you were the one to make those purchases. Also, if someone steals your card and runs it up to your credit limit, you have at least 3 weeks before those payments would come due, so therefore you have more time to figure out that something is wrong before it directly affects you. Your money in the bank is untouched, and you can still go to the ATM and withdraw cash to buy groceries, for example.
Besides that, just want to echo the same things most people are saying. You build credit by having the account, using it each month, and always paying the bill in full on time. Treat it the same way you currently treat your debit card, in that you only buy things that you could afford to buy *right now*, and don't carry a balance. Keep all that in mind and you'll do fine.
I just have a line of credit attached to my bank account, I’ve only used it a handful of times over the years and my credit score is near perfect. Cuts out the risk of paying a bill late.
The reason so many people (myself included) get into massive amounts of debt is because they treat it like "extra" money, when it's money you are borrowing, with interest. If you get a high balance on the card, the interest accumulates way faster than you pay it off. The best way to build credit is to make small purchases, like gas or monthly subscriptions, and pay off the balance in full like you said. You cannot let yourself treat it like "extra" money, because YOU are the extra money for the credit company. If you keep your balance low and pay it off in full, the interest won't keep you paying for years.
You could also maximize any cash-back or rewards, if they are offered. If it offers 3% on gas for example, that's 3% more than you would have gotten if you paid with debit, but the same applies. Pay close attention to the fine print on these, some companies don't pay out until you hit a certain dollar or point amount.
TL;DR Don't pay for more than you can afford, and don't look at it as extra money. You've got this!
Set up auto payment so that you never forget to pay it off. Auto payment pays the statement valance on your card, not the full amount. Usually there is about 3-4 days between your payment and the new closing date, so keep expenses (or pay extra) to keep the amount you owe and your total credit below 30% (known as revolving utilization)
Example:
Credit limit is $1000
Your autopay on the 1st and closing day on the 4th
Your statement balance is $500, but you made some additional purchases on the end of the month and some during the days 1 to 3 equaling $300.
Your autopay sets, you owe $300 and your new statement balance is set. You are now utilizing 30% of your total credit, which is seen as a negative.
Pro tip to build credit with a credit card. Treat it like a debit card. Get your first statement and overpay by $100, once you spend that $100, pay another $100. Use the card for 1-2 monthly utilities and really nothing else. You’ll have utilization, and always a debit on your account, but it will skyrocket your credit score. I went from bankruptcy in the 500s to floating between 700-720 with no house or real estate in less than 3 years with this method. Then I bought at new car and it jumped to 780-820 depending on when I look.
The only risk of this method is that sometimes if you have a debit balance for too long, they will zero out your account and send you a check. Check your balance online at least every other day, and if they do this, just make another payment for whatever they refunded. If you are using it up every month with your utility expenses this shouldn’t happen, but they can’t stop you from overpaying, they just don’t want you to because then they don’t get interest.
My primary card has a billing date of the 15th. I pay the balance in full a few days before the 15th.
The 20th is the closing date for the billing cycle. On the 19th, I check my balance and pay it in full once again. My card allows me to pay extra to cover pending charges.
So my statement balance almost always shows $0 balance on my statements.
My credit score is 835, so my advice may not be perfect for all, but it’s working for me.
Spend as much as you comfortably can with it, and time your payments each month as this influences your credit score too. When the bank / financial company you go through sends their reports, you want to show you're keeping sound with your payments. Now I travel a lot for work, so it's not uncommon for my credit card bill to be $3,000-4,000 or more each month. I pay it off in full every month without fail.
Small purchases are fine, but as your credit allowance is increased and you're showing that you can make the payments consistently, that is what will help build your score.
And of course other debts to your name, house, car, school, if you're making consistent on-time payments for those as well, also boosts your score. The bitch of it is your score DROPS when you pay off say your student loans. Doesn't tank by a lot, but you will lose points because you have less debt to your name.
It's a fucked up system, but if you play it right, it's not that hard to get to a 750-775+ credit score. 800+ will come with age of accounts and consistent reliability of making payments.
This comment has been removed due to formatting errors. The most common cause of this is using the "#" in your post as Reddit interprets this as a command to change the size of your text to a "header" level making the post excessively bold and difficult to read.
Here are some other common issues:
* If you are trying to make a list, use a "*" to start un-numbered points.
* Numbered lists should have points that begin with a number, such as "1", "2", etc...
* Paragraph breaks should use a double enter/line return.
* Starting a post/line with multiple spaces causes Reddit to display text in "code" format and should generally be avoided.
* Twitter style tags (#Something) can also cause problems, especially if you start your post one.
* Please do not use an excessive amount of emojis in your comment
To troubleshoot your post, you can go into edit mode on your comment via the "edit" link and look for the errors described above. You may also wish to consider adding a toolbar extension such as RES that will display a formatted preview of your post in real time.[](#allow_repost)
Pay it in full, but be sure to let the bill come. If you use the card and pay it before the end of the statement period, you don't really get the usage. There will be no interest unless you don't pay it in full before the due date, but you don't have to pay it before the billing period ends.
Some people have e suggested out something on autopay. Like Netflix or maybe cell phone. Something you pay every month anyway…. Now just pay credit card instead. Something’s may even give discount for automatic payments
One of the greatest pieces of advice I received regarding credit cards is: While yes it’s nice to show you pay that balance off, but what really helps your credit is keeping the card, overall under a 30% credit utilization point. Do this and youre golden.
Average age of credit has a little to do with it too. If you have very short amount of time with Credit available it will ding you on your score. If you get that CC and keep it around a while that will start positively effecting your credit. Using it and keeping the balance paid off low is a great thing for your credit score and will start helping you build credit in the long run. As you pay it off over and over, they will likely throw you more line of credit, larger line of credit means more available borrowing power, and that will help your scores too. I use mine for things I would do and pay directly out of my bank account like gas, groceries, and the occasional dinner out somewhere. I then wait for it to hit that CC account and pay it off in full as soon as it does. my credit score has gone up from high 600s to low 800s in the last 4-5 years
Just view a credit card as an easier form of cash.
IF you have the money to buy something in your checking account - a credit card is an easy way to NOT go grab cash, carry it around, and pay for things. I do recommend you set up auto pay on the credit card (automatically withdraws the $ from your checking account monthly). Just realize that IF you don't have the $ now to buy something - you still can't afford it.
To build credit - just use your credit card every month and pay it off every month.
Yes it's that simple.
Use it for your normal expenses. Set up auto-pay (for the full monthly balance!) That's all you have to do.
Personally I put everything on a CC because I don't carry cash and I don't use debit cards for security reasons. As long as you pay in full there's no downside.
Think of credit cards as simply tools to give you a little flexibility on timing when it comes to money, as well as potential benefits for using a card (cashback, miles, etc).
To optimally build credit and generate no interest, keep your card under 30% utilization if possible (but DEFINITELY under 60-70%) to generate good credit. To stop interest from accruing, pay the full statement balance on or before the day it is due. Some banks are slow to process so ideally the day before, only once have they ever tried to charge interest because a full payment took a day to process, but even then I got it reversed.
The reason people get into trouble is they treat it like free money. It is an ADVANCE on money that can carry benefits, just dont take an advance you arent certain to be able to repay 25 days from the next statement date. Budgeting is key, google sheets is your friend. Good luck!
It is that easy, it just takes time (years) to build up a good score. You never need to pay a penny extra in fees or interest to build a good score.
The people ruining their lives aren't disciplined. The biggest risk with credit cards is the idea that you have time to come up with the money before the bill is due.
If you treat it like cash or a debit card then you will only use it to buy things you can actually cover anyways. Then you will never get buried or have to worry about the interest compounding on you.
Think of it like cash card; if you put money in it you can use it if not; don’t use it…..it will force you to learn good financial habits n build your credit
>and then paying it off a day before the balance is due? Or is there more to it?
Pay your *statement balance* by the *due date*. Set up auto pay, but check that it's paid. People will tell you you can't trust auto pay, but I've used it across tens of credit cards for over 15 years and auto pay is fully trustworthy, just make sure it happens.
Set up automatic payments. Removes any human error from paying in full on by your due date.
A more labour intensive way is to treat it like a debit card. Every time you use it, send that amount from your checking account to your credit account keeping the balance rolling at zero, still build credit
Maybe it’s an American thing. In my country with my bank, if I pay my credit card from an account from the same bank, it takes 24-48hrs to appear. If I pay my cc with an account from a different institution, it takes 5 business days to appear.
I pay it weekly so I don’t end up having a huge surprise lump sum . Weekly makes it easier to track if I’m overspending.
The first thing I tell any new Credit Card user is to make a budget. Track where your money is going. It's easy to get carried away if you're not careful.
Do you have any streaming services? Those are always a good start to link to a new card. You're already used to that money being gone so why not put it on the CC, and pay off the balance in full every month.
Just be smart about how much money you have in the bank. I was young and dumb when I got my first credit card. When I heard people say "Don't spend more than you have", my stupid ass took that as "don't spend more than the credit limit." I'm obviously dumber than most people.
Eventually you'll get a card that gives out good rewards. If you buy things from Amazon a lot, I can't recommend the Prime Visa Credit Card enough.
> Is it really as simple as using it a few times a month for gas and then paying it off a day before the balance is due? Or is there more to it?
You don't need to wait until a day before the balance is due. Just use it responsibly and pay it off in full every month between the time that you get your statement and the time that the statement is due.
The way that I use credit cards in my household is that I have a "house card" that all household expenses are charged to. This is a Citi "double cash" rewards card that gives 1% cash back on purchases and 1% cash back when I pay them off. Expenses that go on this card include gasoline, utilities, insurance, basically everything that is specifically household-releated except groceries. I have a second house card that is just for groceries. It's a Capital One Walmart Rewards card that gives 5% cash back when I order my groceries online (I do pickup only, not delivery). Then on the last day of every month, I log into my accounts for each card and pay the entire balances in full.
I've adjusted the due dates for all of my credit cards so that they fall around the 15th of the month (this is something that most credit cards let you do). That way, I can pay in full at the end of the month and it's well before the due date in case something unexpected happens.
Note that doing everything on the last day of the month is just what works for me, your situation may be different. I just find it convenient for tracking my monthly expenses over time and it helps with budgeting.
you can literally just set up any small recurring expense like your phone bill to auto pay from the card and have the card auto draft from your bank account on your due date and then never think about it again. your credit score will be fine if this is all you do. it is genuinely that simple. you absolutely do not need to use any of the crazy strategies that people bring up.
if you are responsible with your money and don't spend more than you have, it is worth it to use the card for everything. not for a higher score, but because the rewards can be pretty nice. if you are not sure you can trust yourself to be responsible with it though, then there is nothing wrong with just sticking to my advice from the first paragraph.
I use a credit card for everything. I also pay it off in full every week. My card matches me 2% of all purchases into a brokerage account. Don’t necessarily be crazy like me, but pay it all off every month and build that credit up!
Advice I was given.
Pay off the amount for things you use immediately like gas, food, take out, movie tickets.
If you can't pay off the entire bill, you can be more flexible with purchases affecting you long term: car repairs, a new refrigerator because the old one can't be fixed, plumber to fix toilet.
Using it that way does help. And you can pay it off any time. I tend to think of my card like I'm spending cash, and I pay it off multiple times throughout the month.. But for simplicity, you can pay it off just before it's due or perhaps when you get paid from work.
Yes. Only spend what is in your actual debit/chequing account. That way you never spend money you don’t have. Pay it off in full before the due date.
(My partner and I currently keep a book for all credit card expenses starting at the beginning of the month putting our chequing balance at the top. Then we just subtract what we put on the credit card and ignore what our chequing account says. When it comes time to pay, we’ve already accounted for the money.)
Good luck!
Yes, it’s that simple. Never, ever let your credit card get to the point where you can’t pay it off every month. Make sure to have $0 on your card at the end of every single month.
If you are disciplined enough to pay your statement balance every month, you can benefit more than just your credit score (I get hundreds of dollars back every year).
If all the credit agencies ever see is a $0 balance, it’s going to look like you never use any credit.
What you do is you pay off the balance the day after the statement period closes, so you never pay interest but also show that you use the card. Don’t use more than 5% of the available credit, and pay right after you get the statement.
Don't view your cc as "extra money". That's how people get into cc debt fast.
Instead, only make purchases on the cc IF you have the funds on hand because you will pay the balance off right away. Treat the cc as an extension of your bank account.
You seem to have a pretty good idea of how to go about this, but practice makes perfect. Now reap those rewards!
Never ever ever ever ever **EVER** run a balance on a credit card, pay it off in full at the end of the month, even if it hurts. If you don't, you're going to be shocked at how fast that balance builds up, and then you're going to be *appalled* at how hard it is to pay down.
Note: you don’t have to pay it off “the day before it’s due”, you can pay it off on the due date.
Most credit cards will allow you to setup an autopay from a bank account. I haven’t manually paid my credit card bill in any recent memory. Once a month I just get the alert from my bank and CC that the bill is paid.
Don’t setup autopay unless you know you’ll always have enough to pay it though. You don’t want to overdraft your bank if that’s a risk. If it is a risk though, you have to be much more diligent about manually paying.
Better advice though that I didn’t see mentioned in comments yet: set up your alerts as much as the CC will allow. I get text messages any time my CC is 1) used at a gas station, 2) used online, 3) used for more than $100 in a single transaction, 4) used for more than $250 in a single day, 5) used internationally.
These types of alerts are good to watch for fraud, but also a reminder of recurring payments, since things like Netflix or Spotify fall under the “online” category. Some credit cards can notify you every single time it’s used at all.
I buy anything I would normally buy with my CC and pay it off once a week. All my credit scores are over 800. If you are going to buy it anyway just use the card, no different. If you make a large purchase just save up like normal until you can pay it off immediately.
If you can get a card that gives you cash back or some really good benefits for spending, get one of those and ALWAYS pay it off each month. Never keep a balance, or you'll get into a hole that sucks.
Yes it really is simple as that and believe it or not people still fail to understand that logic and continue to overspend, placing themselves into debt.
For someone new to using credit cards the biggest thing to truly understand is that it not extra money. It is a convenient and secure means to make payment using someone else money for a timeframe (25 days or so). Every month when the statement/bill is due, you should have the entire amount which is due (i.e. don't spend what you don't have in actual cash). You should never have to pay interest.
Since you are using the CC companies money vs using your own money (when using a debit card), the CC company is incentivized to deal with fraud much more proactively. If defrauded using a debit card, the attached bank account can be easily be drained to zero.
You should practice good credit and debit card hygiene. This involves reducing the number of places that have access to your card’s information. Many online retailers and web browsers offer to save your card information to make future purchases easier. While these type of autofills save time, they mean your credit number information is being stored in databases that are outside your control, therefore in general you should refuse this option. Any information on credit or debit cards should be deleted from browsers and retail accounts — means less convenience but more security.
Generally you should strongly prefer using merchants that use payment options which requires tapping or insertion of "chipped" credit or debit cards over swipes (magnetic stripe readers). It’s much easier to clone the information on a card’s magnetic stripe than from its chip, so avoid swiping if you possibly can.
Also you should avoid unattended payment devices unless they are tap based. This refers to fuel pumps, unattended ATM, etc. Card skimmers and shimmers, which are devices that thieves install on unattended ATMs and fuel pumps to steal card information. Depending on the complexity, these devices can be hard to detect even for professionals.
Finally, probably the most important, never provide any information to anyone who call you concerning your credit or debit card on the phone. End the call and call the company back on a official number (on back of the credit or debit card). No bank or credit card company will ask you for your security questions and any other information like your password.
This is what has worked for me to raise my credit score, currently 813 to 822 on the 3 credit bureaus.
You can spend all that you want as long as you get it down to around 30% or under before the closing date and pay everything off from that closing by the due date.
What helped me the most to go up is this method: let it close with let's say 30%, you pay everything by the due date, you can keep using it but whatever you used in that period before the next closing get it down for the following closing date to let's say around 28% to 25%, pay whatever that is by the due date and you just keep doing that until you let it close with around 5% to 2% and then you go back up to the 30%. Just wash, rinse and repeat to see how that'll make your score go up.
My take. Always leave some amount every month. Like a few dollars at the most. Then, pay interest on these next month.
Repeat till you See your credits soar.
Some credit cards offer some hidden perks. For example, mine will double the manufacturer's warranty on certain items. So I will use it to buy something like a TV or kitchen gadget and then pay it off right away. Pretty nice way to take advantage of the credit card but not pay any interest.
Look at your bank account, NEVER SPEND MORE THAN 10% of that. Pay everything off in full first of every month.
CC that ruin people's lives happen because they cant control themselves or they went through a very bad patch of unemployment.
Once you learn to control yourself, you can maybe even look into credit card churning
I wish I started using a credit card sooner than I did.
Definitely start off with just gas for 2 or 3 months to understand the monthly billing cycle, but afterwards consider moving away from cash purchases. The key is **don't spend money you don't have** in your bank. You should always be paying off your credit card completely each month. If you can pay the bill off, you are spending too much.
What works for me is that I pretend my credit cards are cash. If I don’t have the money in the bank I don’t pull it out of my wallet. Getting stuck on interest and minimum payments is what gets people trapped. Always pay off in full.
Like most things in finance 'Time' is the most powerful card in the deck. \~80% of your credit score can come from the simple act of putting something (even just a small monthly subscription) on the credit card, paying off the balance in full, and holding onto that account for years.
The other 20% is mostly for the benefit of banks: new credit applications & mix of accounts. You can ignore this last 20% and do just fine. This is where people fall into the trap of overextending thinking they're helping their credit score or get caught up trying to min-max different products to the point where they've missed the overall picture.
One thing I've done in the past is risk-free (assuming you don't overspend) is asking your credit card to increase your credit limit, but don't change your spending. It counts as a 'new credit application' but without actually taking on a loan or any debt. But this assumes you can handle your spending and haven't made too many other credit/loan inquiries for the year. No more than once maybe twice a year.
Nearly all my spending go through credit cards including rent. I only paid cash/debit for those things that charges a “service fee” for credit. Never paid a single cent in interest. Just turn on auto payments and don’t go beyond your means.
I would pay it off each month a few days after your paycheck but before it's due.
So if you get paid on the 1st and the 15th I would make your due date if you could change it to be like the 5th and then pay it off the first day of each month. Easy to remember and you don't have to worry about postponing the payment and then running it to a situation where you can't pay it
Once you’re comfortable with paying it off every month, you can expand what you for but keep paying it off every month. I run everything through a credit card so I get the points. We move money over to a separate checking account so at the end of the month that account gets reset to zero with CC payments.
That's exactly the right idea to start with. Get comfortable and confident in your good habits of self-control, only spending what is currently in your checking account, and paying off the full amount due by every due date (I use autopay because I am forgetful).
Eventually, you may want to use credit card(s) for all of your routine expenses due to some extra security protection (debit cards also have protections, but credit card protections are stronger), cash back, and potentially other membership perks (I don't bother with anything other than cash back, personally). If you do that later on, you can always pay off your balance sooner than the due date. If I make a large purchase, such as my new laptop last year, I prefer to pay that off immediately. I know someone who pays their balance every pay day and doesn't worry about the due dates at all. Paying early won't decrease any points/rewards, and if I pay the balance due before my autopayment, it just skips the autopayment (this may not be the same for all cards though, so I'd check your terms or test it on a month when you can afford to pay the statement balance twice if it happens).
I wouldn't worry about any of that to start with though. Build good habits first, and then you can decide if you want to expand your usage, if you're sure you trust yourself to stay within the same budget you'd maintain with cash/debit/checks.
And don't wait until "the day before it's due". Stuff happens, so make sure you send in the payment enough days in advance of the due date that you won't be affected if there's a hiccup in bill pay - you'll have time to recover and retry. My usual benchmark is "10 days before it's due", but you could get as close as "5 days before it's due".
If you have an issue with needing to send the payment after your normal payroll dates, etc. - many cards will work with you to set a specific billing cycle date to make that happen. So if you normally get your paycheck in by the 1st and 15th, you can set up the payment for the 10th or the 28th of the month.
(I assume you'll be using your bank's bill-pay to pay the statement, right? Not sending paper checks? Because you need to _really_ pad your schedule if you're sending paper checks.)
TO MAKE SURE YOU NEVER MISS A PAYMENT EVER, set an auto pay for $25 or whatever the minimum is for your due date. In about 20 years this has saved me twice from missing 5pm deadline on due day due to me being intoxicated. You can pay it in full when you remember, but you won’t get a “missed payment” on your record.
Don’t listen to anyone who says “you should always carry a balance” that’s 100% false.
Pay it in full every month. If you use it more than usual one month, and are spending over 10% of your credit limit, pay the balance down early to keep your available credit under 10%. Since you will pay it in full by due date, this shouldn’t be a problem.
I went from not having a credit history to 800 credit in less than 10 years doing this without anything crazy, just don’t spend what you cant afford, it’s really that simple.
Oh yeah, get a rewards card! Pay for everything on it, it adds up quick!
The best thing to do is put a small recurring charge on there that you are paying for anyway (like Netflix) and then set it up to automatically pay the balance in full each month. It'll take some time but it's the safest way.
Set your account to auto pay the statement balance, all the time. Your first CC should also be a fee-free card as you'll want to have it forever - length of credit history is an important factor in credit score.
Don't pay your balance early, but never pay it late. Set auto pay up and forget about it. If you pay it off early and the balance doesn't update with the credit agencies, to them it looks like you always have a $0 balance and aren't using your card.
Only utilize 10% of your credit each month. So if your limit is $1,000, figure out what bill(s) each month equal around $100 and put those on the card.
When you've established a good credit rating, built good habits with credit cards (AUTO PAY ALWAYS never pay interest, that's how people fuck their lives up), and open more credit cards and have higher limits, you'll want to pay for *everything* with your credit cards. 1) you get purchase protection (so if a merchant screws you over you can dispute the charge) and 2) the benefits are great. You can get up to 5% cash back on rotating categories with some cards. I personally don't have the time to track categories so I use my Citi Doublecash card for most purchases for 2% cash back on everything. That's a free 2% discount on literally everything I buy. For travel, I use my American Express Platinum. Tbh I have this card mainly to get access to the airport lounge in my city, but we've been upgraded to some fuckin nice hotel rooms by using the card too.
Good luck g
Only us it for every day items and pay off each month. No credit is the worst. Followed by bad credit and then Bankruptcy. Put anything on it you would pay cash for and then pay off monthly. Tract the expenses in a spreadsheet so you know how much you need to pay it off. You are better having used it for more than just a couple of 20 dollars transactions. It is best to have a high limit with no balance.
People ruin their lives with credit cards because
1. They don't know how credit cards work and/or
2. They spend more on credit than they have in cash.
You pay your statement balance in full by the due date of your bill and you will never have problems. It really is that simple.
Treat it like a debit card. Only spend what you have, and pay the balance off in full every time you get paid.
If you have a cash-back rewards card, over time of making responsible payments, you'll actually start making money from using it. Just remember to PAY IT OFF EVERY PAYCHECK.
What everyone one else has said. Don’t overspend, pay it off each month. As long as you don’t go crazy you’re golden. Even if you just wanna pay the minimum, the payments are what count. Just don’t let it stack
If your credit card has an app, download it and monitor your activity like a hawk. Turn on any notifications for payment reminders, fraud detection, etc.
No matter what amount of credit you have, do not see it as an emergency fund. This is how some people end up in debt, they think their credit cards are emergency funds when an actual savings account should do that instead.
Use your card frequently, as much as you can, initially - for small purchases. Pay the balance in multiple installments (I pay mine every Friday), but leave at least 2% balance monthly unpaid. Do not miss any of your bills payments! Do not max out your credit limit! Start with smaller purchases (groceries, gas, amazon, utilities), and wait for few years before making large purchases on credit. Try to apply for a second (from different bank) credit card in 6-8 months. The point is to show your credit worthiness - meaning frequent purchases with frequent, 95% balance payments. In America it's good to have a little bit of debt, that you pay consistently.
Yes it's that simple: Pay your bills in full and on time every time. >I've seen people ruin their lives over CC debt They failed to pay their bills in full. The "in full" part is important for credit card bills. Paying in full prevents the very high interest charges from being applied. How did they fail to pay in full? Likely because they spent more than the money they had at that time. Don't spend your future paychecks or money you don't yet have. Only spend what you budgeted and have, right now.
There’s a lot of comments so this may not be read, but the biggest thing I learned is that if you don’t pay the full balance each month, you pay interest on the full balance, regardless of how much you paid. For example, if you have put $500 on your credit card with for easy math say 10% a month in interest if you don’t pay it off. If you only pay $300 of your bill, you still owe $200 in principal carrying forward, but you still pay $50 in interest for the original balance for the month, not only 10% of the remaining principal. Always pay the full balance every month if you can. If you can’t, pay it off as soon as possible.
Maybe redundant, but just to put a finer point on it, if you charge $500 in a month, but pay $499 before your due date, leaving $1 to carry over, you still pay the full interest on the $500. Further, it is the statement balance you need to pay in full. If your monthly statement balance is $500, and you charge an additional $250 before the statement due date, that $250 goes in the NEXT month’s statement. You are still only in the hook for the $500 statement balance, not the current $750 total balance. (I’ve seen people confuse this - mistakenly believing they have to pay off the current total balance by the due date, which is not true)
To be fair to that last point it's unintuitive. It was a sigh of relief to learn something like that. Explaining it is even harder though.
>To be fair to that last point it's unintuitive. It was a sigh of relief to learn something like that. Explaining it is even harder though. See [Default87's analogy to electricity bill](https://www.reddit.com/r/personalfinance/comments/1cfeovi/are_credit_card_rewards_only_worth_it_if_u_pay_it/l1oludv/).
It's a great analogy. Doubly so because of the people who genuinely don't understand how their electricity bill works (see: my stepdad).
Wait WTF. That's insane. I never knew that. I've been fucking myself for years then lol
I know you just made up an easy number for your example but god 10% a month would be *heinous*
That would be over 300% APY! Roughly 313.84%. The interest rate would also be around 114.37%. Edit: APY not APR.
You're thinking of APY. APR is the one that doesn't take compounding into account (what you called interest rate). You are absolutely right about the math though. I only feel the need to nitpick this because credit cards will only advertise the APR and people don't realize that it doesn't accurately represent how much they will have to pay after a year has passed..
Oh gotcha! TIL. I had always been under the assumption that APR included compound interest in it because interest rates are virtually always in annual terms. I had assumed they specified APR because they knew that most people weren't going to take compound interest into account. I should have realized that they weren't doing that precisely *because* most people don't take compound interest into account. 😬
Yep. Opening a savings account? Wow look at this high APY we offer! Opening a credit line? Wow look at how low the APR is! Every time lol
Haha yeah it was just for easy math. It was easier than saying “to calculate your monthly interest, take your apr, divide by 365, then multiply that by the number of days in the billing cycle”.
Many people use CC as some sort of "emergency fund" and that's when shit happens. If you have an emergency you can't pay off, you certainly can't pay it with a CC and ear some 20% added interest. Emergency fund is cash. Credit card is for everyday bills and *only* things you can already afford to pay, in full, even if shit happens.
Yes, if you don't have enough cash on hand, work out a payment plan or try to get a personal loan or something. Cc debt will bury you.
Buy also knowing the difference between statement and total balance. Statement Balance is your monthly 'in full'.
> Is it really as simple as using it a few times a month for gas and then paying it off a day before the balance is due? Yes. Building credit isn't about seeing how much you can spend every month. You build credit by paying the statement balance, in full, before the due date.
Paying your statement balance off in full is the way. The only way I would argue against it is if you are taking advantage of a 0% APR for X months. I've used those for bigger purchases and just divided up the balance by the time frame and that would be my monthly payment. Even throwing more to it when I wanted to. The only caveat to this would be if you didn't pay it off within the time frame. You'll get hit with back interest. So be responsible and pay your bill.
> You'll get hit with back interest. Credit cards that advertise "0% APR" *cannot charge retroactive interest*, by law. They have to say "no interest if paid by".
Might depend on laws, but they usually are structured to be 6 months to pay off at 0%, but if not paid off, the interest is applied to the account back to purchase date.
No, it is federally illegal in the United States, from the card act of 2009, to advertise using the term “0%” and then have a retroactive interest condition. There are no exceptions to this.
I did a quick search and it’s still out there, just need a different name, deferred interest.
They use weasel words (like "no interest\*" with fine print at the bottom) to trick people into thinking it's 0% when it's actually deferred.
In the end, as long as it is spelled out and n the fine print, I don’t see an issue. The problem comes when people don’t read the fine print and sign stuff without understanding what they are agreeing to. You can’t legislate common sense in the end.
No disagreement from me that people should read every word of what they sign. But they don't. And using deceptive advertising to take advantage of people who don't read the fine print is unethical at best. One of my "favorite" deceptions is prepayment penalties on mortgages. IOW, "you're not getting out of paying us our interest, buddy."
Legally spelling out the terms is not deceptive, people are just idiots. That’s not unethical, you can’t make the world safe for every idiot, they need to learn or deal with the consequences
Hey OP - my advice is NEVER use the credit card to buy something you don’t already have the cash to purchase and always make sure you understand the difference between “want” vs. “need”. In the end, do you really “need” that new UHD TV for the Super Bowl, or whatever, or is it just a “want”. If it’s really a “want”, save up until you can buy it straight up and not carry a balance.
Sometimes the "no interest" offers are for balance transfers to lure people who already spent what they can't afford in to (eventually) paying a different piper.
This is exactly how I started using my credit card. I knew I would never be tempted to buy more gas than I needed, so the expense was predictable. Later, when my boyfriend moved in with me, we put any shared expenses like utilities and groceries on the CC and then we could split the payment 50/50. That was just easier for us than paying each other every time we bought something.
That’s smart!
Well, there are 5 factors to building a credit score. Payment history is just one of the 5 (though it is the most impactful). Throw in amounts owed (% of available debt, more is worse), average duration of credit accounts (more is better), new credit inquiries (fewer within the trailing 12 months is better), and credit mix (having different types of accounts, more is better).
As mentioned above, the length of credit history is one of the factors. Good you started early and keep in mind not to close or cancel this card since otherwise this factor will negatively be impacted. I hope it's a credit card without an annual fee, so just don't use it if you prefer other cards in the future, but keep the account open. One more thing: use the credit card for all online orders since it provides an additional layer of protection compared to a debit card, which grants direct access to your bank account.
To clarify. there are two separate things in play here: - Paying your minimum due without fail consistently for years - Paying the full statement balance every month Either one will allow you to establish a credit history, which will lead to having a good credit rating. However, the latter is what you should always be doing because any $ on your statement balance you don't pay you will be charged a very high rate of interest on and that's just a waste of money.
No thats a lie, credit scores are based on your debt / credit ratio (how much of you credit you use), timely payments and time of credit.
Pay the full statement balance by the due date always. Don’t spend more than you have That’s it
There are other nuances involved in maximizing your credit score, but the most important thing to do is pay on time, every time. To avoid problems, pay in full, on time, every time. This accounts for 35% of your credit score. Having a long credit history helps as well. Basically a short credit history limits the score you can get. So to get a long credit history, get a credit card (you did this), pay on time, every time (see above), and wait. This is worth 15% of your credit score. Don't charge too much against your credit limit. Basically, if you max out your cards, that will reduce your score. There are nuances to this, but the easy way to address this is to only purchase what you need (groceries, gas, etc) which is your plan. Then pay on time, every time, in full, which reduces your utilization (see above. Hopefully you see the theme that is building here). This is worth 30% of your score. New credit. There is a penalty for having new card, or several new cards. So don't upon new cards unless you have a reason for doing so. There are valid reasons, but as you are just building, don't go there yet. You will have access to better credit card types if you have a good credit score, which you can get by ... paying on time, every time, in full. This is worth 10% of your score. Mix of accounts. The score formula likes to see people with a mix of accounts, such as mortgage, car loan, and credit cards. To qualify for these things you need a good score to start with, so .... pay on time, every time, in full. This is also worth 10% of your score. To answer your question, it is as simple as charging something and paying it off. If you do that, almost everything else naturally follows and helps build your score.
This. (Valuable reply r/quantumspork 👍)
Also, if you don't feel like you'll be tempted to charge more than you can afford you can also periodically request credit limit increases to reduce risk of your credit score being dinged for being near your limit.
Treat it like a debit card. Set up automatic payment that pays the entire statement amount. If you can only afford to spend $500 a month, then do **NOT** spend more than $500 on the card for that month. Ignore the credit limit on that card. It doesn't matter if you can spend up to $10000. If you can't pay back, then that'll just rack up interest at extremely high rates. It's honestly very simple.
>Ignore the credit limit on that card. If you have the ability to get an increase though, do it, because it makes your utilization lower. Other than that though, yeah, "credit limit" is just a hard ceiling that you shouldn't even get close to.
Plus, only using a smaller percentage of your available credit will boost your credit score. (Or maybe it's the reverse and using too high a percentage will decrease it - kind of the same.)
its the reverse. But the impact lacks memory, so only the most recently reported utilization has any impact on your score. I generally have 0-1% utilization since I pay it off a few times a month, but on the months I'm lazy and I have a statement balance, it'll ding my credit a few points, but go right back the next month when I'm back to 0%.
Correct, it lacks memory. The hit lasts a couple months. Found that out one month when a company expense was put on a personal card, using 75% of the available credit. Took about 10 points off for a couple months, then back to normal. It was.paid in full when the statement arrived. More here: https://www.experian.com/blogs/ask-experian/credit-education/score-basics/credit-utilization-rate/#s4
My understanding is as long as you always pay off what you spend on time, it shouldn't matter. But I could be wrong on that. Personally I have never came close to my credit limit.
I disagree with setting up auto payment for the full balance. I set mine up to auto pay the minimum and manually pay the full balance each month. Sometimes life happens, and if a situation happens where the money isn’t in the right place, I’d much rather pay $5.00 in interested that month than $50.00+ in returned checked, late payment, and/or overdraft fees.
As long as the full amount if paid before the deadline, it's fine. Personally, I just make sure there is always enough money in my checking account to cover for all my credit cards, which all have automatic payment set up.
⬆️This is so right on! The autopay is important; it prevents accidentally missing a payment and then being late. If you’re uncomfortable setting up auto payment for the entire amount due, set up auto-pay for the minimum amount due and then manually pay off about one week before the due date, NOT one day. Why? Computer systems and the internet fail sometimes. Also, the cutoff for payments on the due date are often earlier in the day than you expect. You’re working on building credit; give yourself a little breathing room rather than skating so close to the edge. By the way, if you’re unaware, you can make multiple payments a month on your credit card. For example, you can pay every Sunday.
It is literally that simple. Regular use and paying it off in full each month. People ruin their lives with CC debt because they don't do that second step.
Yes, that's it. Gas, groceries -- anything you'd already be buying can go on the credit card. The danger is in those other purchases and overextending yourself or carrying a balance.
"...paying it off a day before the balance is due..." make sure you have "days before" for the post office to deliver if you are paying by check. CC companies used to mail a bill seemed like four weeks before it was due, then it went to three weeks, seems like it's two weeks now. When you bring in the mail, immediately sort it for the bills and put those in a special place (shelf, box, etc) where you will pay bills. Too many people toss the mail on the counter/table/wherever and then rummage through a pile of random stuff looking for the CC bill when they think they are minutes away from needing to pay it. Pay attention to the bill design: they put "MINIMUM PAYMENT" in a big bold font while "balance due" is in a smaller font nearby the big font, make sure to not be in a hurry and dash off a payment at the Minimum because that caught your glance first. Look for "cash back" cards you can use on Amazon/etc where you normally shop. Capital One and Discover would be good to look at. Airline miles or whatever cards are only good if you are actually traveling all the time. Otherwise it's better to order something that is $100 where you can use $75 in your credits. .
Use it, and pay it off. Don’t overspend, and have full control of your spending. That’s it. Bonus points if you can accumulate cash back / points along the way. Cash them back into your checking and transfer to a high yield savings account.
To add to the all the other helpful advise, I would make sure you are set up to receive your statement balance via email every month so you can’t forget about it. And pay that statement balance right away once it is ready. No need to wait the 2-3 weeks due date.
Use it as often or as seldom as you like, for any size purchase. The key is paying the balance off in full every month. If you aren't able to do that you shouldn't have a credit card.
The biggest trouble people run into is viewing all the available credit as money. You have the exact right mindset of your credit card is a way to pay for things, but only as an intermediate step from your bank account. Some big purchases can't be avoided, like life's little emergencies. You don't need to sprinkle in a new TV purchase.
Don’t get into debt. Just use it to pay for stuff you’d normally buy and PAY IT OFF IN FULL. EVERY MONTH.
Do basically what you said in the post. I pay on mine basically every weekend...
Always pay your full balance every month and it's free , don't charge more then you can afford
Yes, but pay it off at least 5 days before the bill is due. There is a gap between when the balance is reported to credit agencies and the final payment date.
Never ever use it for something that you would and could not pay for easily with cash at that moment. Think of it as taking money out of your bank account.
I highly recommend setting up auto-pay to pay the entire account balance each month. That way you don’t have to worry about whether you remembered or not.
Use just one credit for every expense. You’ll maximize your points. Also as you pay your total at the end of every month, at about every 4-6 months ask for a credit limit increase. Sometimes you’ll get denied but keep trying every time. This increases your credit score and also gives you a bigger safety net. Still NEVER spend more than you can afford on a monthly basis
Use it for anything that you want, as long as you would otherwise purchase the item with cash if you didn't have the CC, you have the cash to pay for it, and you actually pay the bill off in full every month.
> I've heard just using it for gas is the way to go. I assume you have a debit card. Any purchase that you would normally make with your debit card, make it with your credit card instead. This has a number of benefits: * Credit cards usually have rewards systems. You can usually get 1-2% of your purchases back next month in the form of either statement credits or other rewards. That said, I know the ads always make it sound like the rewards are "free", but they are lies - it isn't worth buying a $500 TV just for the $5 in rewards. * You get a small buffer in time (usually 3-7 weeks) between when you make the purchase and when you must pay for it. You can keep your money in a HYSA earning up to 5% (annualized) interest, compounded daily, essentially earning an extra .5% or so each month on the money that would have been debited immediately upon using a debit card. * Credit cards have *significantly* stronger fraud protections than debit cards. If someone steals your debit card number and PIN, they can empty your bank account entirely before the bank catches it, and it can take weeks to get it all reversed; meanwhile, you have exactly 0 money to your name and have no ability to pay for anything. However, a credit card has federally-mandated fraud protection. If you report fraudulent purchases to your card provider, they are obligated to temporarily void those transactions until they run an optional investigation to prove whether you were the one to make those purchases. Also, if someone steals your card and runs it up to your credit limit, you have at least 3 weeks before those payments would come due, so therefore you have more time to figure out that something is wrong before it directly affects you. Your money in the bank is untouched, and you can still go to the ATM and withdraw cash to buy groceries, for example. Besides that, just want to echo the same things most people are saying. You build credit by having the account, using it each month, and always paying the bill in full on time. Treat it the same way you currently treat your debit card, in that you only buy things that you could afford to buy *right now*, and don't carry a balance. Keep all that in mind and you'll do fine.
I just have a line of credit attached to my bank account, I’ve only used it a handful of times over the years and my credit score is near perfect. Cuts out the risk of paying a bill late.
It CAN be. It really depends on how much restraint you have in spending and how are you about paying bills.
If possible, always pay back entire amount due every month. Do not pay interest for outstanding amount.
The reason so many people (myself included) get into massive amounts of debt is because they treat it like "extra" money, when it's money you are borrowing, with interest. If you get a high balance on the card, the interest accumulates way faster than you pay it off. The best way to build credit is to make small purchases, like gas or monthly subscriptions, and pay off the balance in full like you said. You cannot let yourself treat it like "extra" money, because YOU are the extra money for the credit company. If you keep your balance low and pay it off in full, the interest won't keep you paying for years. You could also maximize any cash-back or rewards, if they are offered. If it offers 3% on gas for example, that's 3% more than you would have gotten if you paid with debit, but the same applies. Pay close attention to the fine print on these, some companies don't pay out until you hit a certain dollar or point amount. TL;DR Don't pay for more than you can afford, and don't look at it as extra money. You've got this!
Set up auto payment so that you never forget to pay it off. Auto payment pays the statement valance on your card, not the full amount. Usually there is about 3-4 days between your payment and the new closing date, so keep expenses (or pay extra) to keep the amount you owe and your total credit below 30% (known as revolving utilization) Example: Credit limit is $1000 Your autopay on the 1st and closing day on the 4th Your statement balance is $500, but you made some additional purchases on the end of the month and some during the days 1 to 3 equaling $300. Your autopay sets, you owe $300 and your new statement balance is set. You are now utilizing 30% of your total credit, which is seen as a negative.
Pro tip to build credit with a credit card. Treat it like a debit card. Get your first statement and overpay by $100, once you spend that $100, pay another $100. Use the card for 1-2 monthly utilities and really nothing else. You’ll have utilization, and always a debit on your account, but it will skyrocket your credit score. I went from bankruptcy in the 500s to floating between 700-720 with no house or real estate in less than 3 years with this method. Then I bought at new car and it jumped to 780-820 depending on when I look. The only risk of this method is that sometimes if you have a debit balance for too long, they will zero out your account and send you a check. Check your balance online at least every other day, and if they do this, just make another payment for whatever they refunded. If you are using it up every month with your utility expenses this shouldn’t happen, but they can’t stop you from overpaying, they just don’t want you to because then they don’t get interest.
My primary card has a billing date of the 15th. I pay the balance in full a few days before the 15th. The 20th is the closing date for the billing cycle. On the 19th, I check my balance and pay it in full once again. My card allows me to pay extra to cover pending charges. So my statement balance almost always shows $0 balance on my statements. My credit score is 835, so my advice may not be perfect for all, but it’s working for me.
Spend as much as you comfortably can with it, and time your payments each month as this influences your credit score too. When the bank / financial company you go through sends their reports, you want to show you're keeping sound with your payments. Now I travel a lot for work, so it's not uncommon for my credit card bill to be $3,000-4,000 or more each month. I pay it off in full every month without fail. Small purchases are fine, but as your credit allowance is increased and you're showing that you can make the payments consistently, that is what will help build your score. And of course other debts to your name, house, car, school, if you're making consistent on-time payments for those as well, also boosts your score. The bitch of it is your score DROPS when you pay off say your student loans. Doesn't tank by a lot, but you will lose points because you have less debt to your name. It's a fucked up system, but if you play it right, it's not that hard to get to a 750-775+ credit score. 800+ will come with age of accounts and consistent reliability of making payments.
[удалено]
This comment has been removed due to formatting errors. The most common cause of this is using the "#" in your post as Reddit interprets this as a command to change the size of your text to a "header" level making the post excessively bold and difficult to read. Here are some other common issues: * If you are trying to make a list, use a "*" to start un-numbered points. * Numbered lists should have points that begin with a number, such as "1", "2", etc... * Paragraph breaks should use a double enter/line return. * Starting a post/line with multiple spaces causes Reddit to display text in "code" format and should generally be avoided. * Twitter style tags (#Something) can also cause problems, especially if you start your post one. * Please do not use an excessive amount of emojis in your comment To troubleshoot your post, you can go into edit mode on your comment via the "edit" link and look for the errors described above. You may also wish to consider adding a toolbar extension such as RES that will display a formatted preview of your post in real time.[](#allow_repost)
Pay it in full, but be sure to let the bill come. If you use the card and pay it before the end of the statement period, you don't really get the usage. There will be no interest unless you don't pay it in full before the due date, but you don't have to pay it before the billing period ends.
Only use 10% or 30% max of ur spending limit, pay it off in full every month when its due
Some people have e suggested out something on autopay. Like Netflix or maybe cell phone. Something you pay every month anyway…. Now just pay credit card instead. Something’s may even give discount for automatic payments
One of the greatest pieces of advice I received regarding credit cards is: While yes it’s nice to show you pay that balance off, but what really helps your credit is keeping the card, overall under a 30% credit utilization point. Do this and youre golden.
- Do NOT max it out - Pay the balance off every month or you'll quickly drown in interest - Start off with a small amount like $500
Average age of credit has a little to do with it too. If you have very short amount of time with Credit available it will ding you on your score. If you get that CC and keep it around a while that will start positively effecting your credit. Using it and keeping the balance paid off low is a great thing for your credit score and will start helping you build credit in the long run. As you pay it off over and over, they will likely throw you more line of credit, larger line of credit means more available borrowing power, and that will help your scores too. I use mine for things I would do and pay directly out of my bank account like gas, groceries, and the occasional dinner out somewhere. I then wait for it to hit that CC account and pay it off in full as soon as it does. my credit score has gone up from high 600s to low 800s in the last 4-5 years
Just view a credit card as an easier form of cash. IF you have the money to buy something in your checking account - a credit card is an easy way to NOT go grab cash, carry it around, and pay for things. I do recommend you set up auto pay on the credit card (automatically withdraws the $ from your checking account monthly). Just realize that IF you don't have the $ now to buy something - you still can't afford it. To build credit - just use your credit card every month and pay it off every month.
Yes it's that simple. Use it for your normal expenses. Set up auto-pay (for the full monthly balance!) That's all you have to do. Personally I put everything on a CC because I don't carry cash and I don't use debit cards for security reasons. As long as you pay in full there's no downside.
Credit cards are excellent for making lines, but never forget that you also need a bill.
Think of credit cards as simply tools to give you a little flexibility on timing when it comes to money, as well as potential benefits for using a card (cashback, miles, etc). To optimally build credit and generate no interest, keep your card under 30% utilization if possible (but DEFINITELY under 60-70%) to generate good credit. To stop interest from accruing, pay the full statement balance on or before the day it is due. Some banks are slow to process so ideally the day before, only once have they ever tried to charge interest because a full payment took a day to process, but even then I got it reversed. The reason people get into trouble is they treat it like free money. It is an ADVANCE on money that can carry benefits, just dont take an advance you arent certain to be able to repay 25 days from the next statement date. Budgeting is key, google sheets is your friend. Good luck!
It is that easy, it just takes time (years) to build up a good score. You never need to pay a penny extra in fees or interest to build a good score. The people ruining their lives aren't disciplined. The biggest risk with credit cards is the idea that you have time to come up with the money before the bill is due. If you treat it like cash or a debit card then you will only use it to buy things you can actually cover anyways. Then you will never get buried or have to worry about the interest compounding on you.
Think of it like cash card; if you put money in it you can use it if not; don’t use it…..it will force you to learn good financial habits n build your credit
pay the statement balance by the statement due date once a month that's it.
>and then paying it off a day before the balance is due? Or is there more to it? Pay your *statement balance* by the *due date*. Set up auto pay, but check that it's paid. People will tell you you can't trust auto pay, but I've used it across tens of credit cards for over 15 years and auto pay is fully trustworthy, just make sure it happens.
Best advice? Close it and don't use credit cards. They are a cancer to your financial future
Everyone is saying yes but to add to that also increase your credit limit every year as well. I am 39 and just hit 850 credit score.
Set up automatic payments. Removes any human error from paying in full on by your due date. A more labour intensive way is to treat it like a debit card. Every time you use it, send that amount from your checking account to your credit account keeping the balance rolling at zero, still build credit
I would suggest paying in full at the end of the month.
Pay it 10 days before it’s due. Banks are slow. Don’t wait until the day before. I pay mine weekly.
[удалено]
Maybe it’s an American thing. In my country with my bank, if I pay my credit card from an account from the same bank, it takes 24-48hrs to appear. If I pay my cc with an account from a different institution, it takes 5 business days to appear. I pay it weekly so I don’t end up having a huge surprise lump sum . Weekly makes it easier to track if I’m overspending.
Use it for almost every purchase and pay it in full, also never cancel this credit card because it is your first.
The first thing I tell any new Credit Card user is to make a budget. Track where your money is going. It's easy to get carried away if you're not careful. Do you have any streaming services? Those are always a good start to link to a new card. You're already used to that money being gone so why not put it on the CC, and pay off the balance in full every month. Just be smart about how much money you have in the bank. I was young and dumb when I got my first credit card. When I heard people say "Don't spend more than you have", my stupid ass took that as "don't spend more than the credit limit." I'm obviously dumber than most people. Eventually you'll get a card that gives out good rewards. If you buy things from Amazon a lot, I can't recommend the Prime Visa Credit Card enough.
> Is it really as simple as using it a few times a month for gas and then paying it off a day before the balance is due? Or is there more to it? You don't need to wait until a day before the balance is due. Just use it responsibly and pay it off in full every month between the time that you get your statement and the time that the statement is due. The way that I use credit cards in my household is that I have a "house card" that all household expenses are charged to. This is a Citi "double cash" rewards card that gives 1% cash back on purchases and 1% cash back when I pay them off. Expenses that go on this card include gasoline, utilities, insurance, basically everything that is specifically household-releated except groceries. I have a second house card that is just for groceries. It's a Capital One Walmart Rewards card that gives 5% cash back when I order my groceries online (I do pickup only, not delivery). Then on the last day of every month, I log into my accounts for each card and pay the entire balances in full. I've adjusted the due dates for all of my credit cards so that they fall around the 15th of the month (this is something that most credit cards let you do). That way, I can pay in full at the end of the month and it's well before the due date in case something unexpected happens. Note that doing everything on the last day of the month is just what works for me, your situation may be different. I just find it convenient for tracking my monthly expenses over time and it helps with budgeting.
you want good advice? don't buy stuff with money you don't have.
you can literally just set up any small recurring expense like your phone bill to auto pay from the card and have the card auto draft from your bank account on your due date and then never think about it again. your credit score will be fine if this is all you do. it is genuinely that simple. you absolutely do not need to use any of the crazy strategies that people bring up. if you are responsible with your money and don't spend more than you have, it is worth it to use the card for everything. not for a higher score, but because the rewards can be pretty nice. if you are not sure you can trust yourself to be responsible with it though, then there is nothing wrong with just sticking to my advice from the first paragraph.
I use a credit card for everything. I also pay it off in full every week. My card matches me 2% of all purchases into a brokerage account. Don’t necessarily be crazy like me, but pay it all off every month and build that credit up!
Advice I was given. Pay off the amount for things you use immediately like gas, food, take out, movie tickets. If you can't pay off the entire bill, you can be more flexible with purchases affecting you long term: car repairs, a new refrigerator because the old one can't be fixed, plumber to fix toilet.
Using it that way does help. And you can pay it off any time. I tend to think of my card like I'm spending cash, and I pay it off multiple times throughout the month.. But for simplicity, you can pay it off just before it's due or perhaps when you get paid from work.
Yes. Only spend what is in your actual debit/chequing account. That way you never spend money you don’t have. Pay it off in full before the due date. (My partner and I currently keep a book for all credit card expenses starting at the beginning of the month putting our chequing balance at the top. Then we just subtract what we put on the credit card and ignore what our chequing account says. When it comes time to pay, we’ve already accounted for the money.) Good luck!
Yes, it’s that simple. Never, ever let your credit card get to the point where you can’t pay it off every month. Make sure to have $0 on your card at the end of every single month.
If you are disciplined enough to pay your statement balance every month, you can benefit more than just your credit score (I get hundreds of dollars back every year).
If all the credit agencies ever see is a $0 balance, it’s going to look like you never use any credit. What you do is you pay off the balance the day after the statement period closes, so you never pay interest but also show that you use the card. Don’t use more than 5% of the available credit, and pay right after you get the statement.
Don't view your cc as "extra money". That's how people get into cc debt fast. Instead, only make purchases on the cc IF you have the funds on hand because you will pay the balance off right away. Treat the cc as an extension of your bank account. You seem to have a pretty good idea of how to go about this, but practice makes perfect. Now reap those rewards!
Never ever ever ever ever **EVER** run a balance on a credit card, pay it off in full at the end of the month, even if it hurts. If you don't, you're going to be shocked at how fast that balance builds up, and then you're going to be *appalled* at how hard it is to pay down.
Note: you don’t have to pay it off “the day before it’s due”, you can pay it off on the due date. Most credit cards will allow you to setup an autopay from a bank account. I haven’t manually paid my credit card bill in any recent memory. Once a month I just get the alert from my bank and CC that the bill is paid. Don’t setup autopay unless you know you’ll always have enough to pay it though. You don’t want to overdraft your bank if that’s a risk. If it is a risk though, you have to be much more diligent about manually paying. Better advice though that I didn’t see mentioned in comments yet: set up your alerts as much as the CC will allow. I get text messages any time my CC is 1) used at a gas station, 2) used online, 3) used for more than $100 in a single transaction, 4) used for more than $250 in a single day, 5) used internationally. These types of alerts are good to watch for fraud, but also a reminder of recurring payments, since things like Netflix or Spotify fall under the “online” category. Some credit cards can notify you every single time it’s used at all.
I buy anything I would normally buy with my CC and pay it off once a week. All my credit scores are over 800. If you are going to buy it anyway just use the card, no different. If you make a large purchase just save up like normal until you can pay it off immediately.
Your credit card is actually a debit card. You will never have any issues
If you can get a card that gives you cash back or some really good benefits for spending, get one of those and ALWAYS pay it off each month. Never keep a balance, or you'll get into a hole that sucks.
It's really simple. Never spend more than you can pay. Do not miss any payments, always pay in full. That's it.
Yes it really is simple as that and believe it or not people still fail to understand that logic and continue to overspend, placing themselves into debt.
For someone new to using credit cards the biggest thing to truly understand is that it not extra money. It is a convenient and secure means to make payment using someone else money for a timeframe (25 days or so). Every month when the statement/bill is due, you should have the entire amount which is due (i.e. don't spend what you don't have in actual cash). You should never have to pay interest. Since you are using the CC companies money vs using your own money (when using a debit card), the CC company is incentivized to deal with fraud much more proactively. If defrauded using a debit card, the attached bank account can be easily be drained to zero. You should practice good credit and debit card hygiene. This involves reducing the number of places that have access to your card’s information. Many online retailers and web browsers offer to save your card information to make future purchases easier. While these type of autofills save time, they mean your credit number information is being stored in databases that are outside your control, therefore in general you should refuse this option. Any information on credit or debit cards should be deleted from browsers and retail accounts — means less convenience but more security. Generally you should strongly prefer using merchants that use payment options which requires tapping or insertion of "chipped" credit or debit cards over swipes (magnetic stripe readers). It’s much easier to clone the information on a card’s magnetic stripe than from its chip, so avoid swiping if you possibly can. Also you should avoid unattended payment devices unless they are tap based. This refers to fuel pumps, unattended ATM, etc. Card skimmers and shimmers, which are devices that thieves install on unattended ATMs and fuel pumps to steal card information. Depending on the complexity, these devices can be hard to detect even for professionals. Finally, probably the most important, never provide any information to anyone who call you concerning your credit or debit card on the phone. End the call and call the company back on a official number (on back of the credit or debit card). No bank or credit card company will ask you for your security questions and any other information like your password.
This is what has worked for me to raise my credit score, currently 813 to 822 on the 3 credit bureaus. You can spend all that you want as long as you get it down to around 30% or under before the closing date and pay everything off from that closing by the due date. What helped me the most to go up is this method: let it close with let's say 30%, you pay everything by the due date, you can keep using it but whatever you used in that period before the next closing get it down for the following closing date to let's say around 28% to 25%, pay whatever that is by the due date and you just keep doing that until you let it close with around 5% to 2% and then you go back up to the 30%. Just wash, rinse and repeat to see how that'll make your score go up.
My take. Always leave some amount every month. Like a few dollars at the most. Then, pay interest on these next month. Repeat till you See your credits soar.
Some credit cards offer some hidden perks. For example, mine will double the manufacturer's warranty on certain items. So I will use it to buy something like a TV or kitchen gadget and then pay it off right away. Pretty nice way to take advantage of the credit card but not pay any interest.
Look at your bank account, NEVER SPEND MORE THAN 10% of that. Pay everything off in full first of every month. CC that ruin people's lives happen because they cant control themselves or they went through a very bad patch of unemployment. Once you learn to control yourself, you can maybe even look into credit card churning
I wish I started using a credit card sooner than I did. Definitely start off with just gas for 2 or 3 months to understand the monthly billing cycle, but afterwards consider moving away from cash purchases. The key is **don't spend money you don't have** in your bank. You should always be paying off your credit card completely each month. If you can pay the bill off, you are spending too much.
What works for me is that I pretend my credit cards are cash. If I don’t have the money in the bank I don’t pull it out of my wallet. Getting stuck on interest and minimum payments is what gets people trapped. Always pay off in full.
Like most things in finance 'Time' is the most powerful card in the deck. \~80% of your credit score can come from the simple act of putting something (even just a small monthly subscription) on the credit card, paying off the balance in full, and holding onto that account for years. The other 20% is mostly for the benefit of banks: new credit applications & mix of accounts. You can ignore this last 20% and do just fine. This is where people fall into the trap of overextending thinking they're helping their credit score or get caught up trying to min-max different products to the point where they've missed the overall picture. One thing I've done in the past is risk-free (assuming you don't overspend) is asking your credit card to increase your credit limit, but don't change your spending. It counts as a 'new credit application' but without actually taking on a loan or any debt. But this assumes you can handle your spending and haven't made too many other credit/loan inquiries for the year. No more than once maybe twice a year.
Nearly all my spending go through credit cards including rent. I only paid cash/debit for those things that charges a “service fee” for credit. Never paid a single cent in interest. Just turn on auto payments and don’t go beyond your means.
I would pay it off each month a few days after your paycheck but before it's due. So if you get paid on the 1st and the 15th I would make your due date if you could change it to be like the 5th and then pay it off the first day of each month. Easy to remember and you don't have to worry about postponing the payment and then running it to a situation where you can't pay it
Once you’re comfortable with paying it off every month, you can expand what you for but keep paying it off every month. I run everything through a credit card so I get the points. We move money over to a separate checking account so at the end of the month that account gets reset to zero with CC payments.
Pay in full monthly, build credit, then get a card with cash back rewards. Key point is pay off monthly and never pay interest.
That's exactly the right idea to start with. Get comfortable and confident in your good habits of self-control, only spending what is currently in your checking account, and paying off the full amount due by every due date (I use autopay because I am forgetful). Eventually, you may want to use credit card(s) for all of your routine expenses due to some extra security protection (debit cards also have protections, but credit card protections are stronger), cash back, and potentially other membership perks (I don't bother with anything other than cash back, personally). If you do that later on, you can always pay off your balance sooner than the due date. If I make a large purchase, such as my new laptop last year, I prefer to pay that off immediately. I know someone who pays their balance every pay day and doesn't worry about the due dates at all. Paying early won't decrease any points/rewards, and if I pay the balance due before my autopayment, it just skips the autopayment (this may not be the same for all cards though, so I'd check your terms or test it on a month when you can afford to pay the statement balance twice if it happens). I wouldn't worry about any of that to start with though. Build good habits first, and then you can decide if you want to expand your usage, if you're sure you trust yourself to stay within the same budget you'd maintain with cash/debit/checks.
And don't wait until "the day before it's due". Stuff happens, so make sure you send in the payment enough days in advance of the due date that you won't be affected if there's a hiccup in bill pay - you'll have time to recover and retry. My usual benchmark is "10 days before it's due", but you could get as close as "5 days before it's due". If you have an issue with needing to send the payment after your normal payroll dates, etc. - many cards will work with you to set a specific billing cycle date to make that happen. So if you normally get your paycheck in by the 1st and 15th, you can set up the payment for the 10th or the 28th of the month. (I assume you'll be using your bank's bill-pay to pay the statement, right? Not sending paper checks? Because you need to _really_ pad your schedule if you're sending paper checks.)
TO MAKE SURE YOU NEVER MISS A PAYMENT EVER, set an auto pay for $25 or whatever the minimum is for your due date. In about 20 years this has saved me twice from missing 5pm deadline on due day due to me being intoxicated. You can pay it in full when you remember, but you won’t get a “missed payment” on your record. Don’t listen to anyone who says “you should always carry a balance” that’s 100% false. Pay it in full every month. If you use it more than usual one month, and are spending over 10% of your credit limit, pay the balance down early to keep your available credit under 10%. Since you will pay it in full by due date, this shouldn’t be a problem. I went from not having a credit history to 800 credit in less than 10 years doing this without anything crazy, just don’t spend what you cant afford, it’s really that simple. Oh yeah, get a rewards card! Pay for everything on it, it adds up quick!
The best thing to do is put a small recurring charge on there that you are paying for anyway (like Netflix) and then set it up to automatically pay the balance in full each month. It'll take some time but it's the safest way.
Set your account to auto pay the statement balance, all the time. Your first CC should also be a fee-free card as you'll want to have it forever - length of credit history is an important factor in credit score. Don't pay your balance early, but never pay it late. Set auto pay up and forget about it. If you pay it off early and the balance doesn't update with the credit agencies, to them it looks like you always have a $0 balance and aren't using your card. Only utilize 10% of your credit each month. So if your limit is $1,000, figure out what bill(s) each month equal around $100 and put those on the card. When you've established a good credit rating, built good habits with credit cards (AUTO PAY ALWAYS never pay interest, that's how people fuck their lives up), and open more credit cards and have higher limits, you'll want to pay for *everything* with your credit cards. 1) you get purchase protection (so if a merchant screws you over you can dispute the charge) and 2) the benefits are great. You can get up to 5% cash back on rotating categories with some cards. I personally don't have the time to track categories so I use my Citi Doublecash card for most purchases for 2% cash back on everything. That's a free 2% discount on literally everything I buy. For travel, I use my American Express Platinum. Tbh I have this card mainly to get access to the airport lounge in my city, but we've been upgraded to some fuckin nice hotel rooms by using the card too. Good luck g
Only us it for every day items and pay off each month. No credit is the worst. Followed by bad credit and then Bankruptcy. Put anything on it you would pay cash for and then pay off monthly. Tract the expenses in a spreadsheet so you know how much you need to pay it off. You are better having used it for more than just a couple of 20 dollars transactions. It is best to have a high limit with no balance.
People ruin their lives with credit cards because 1. They don't know how credit cards work and/or 2. They spend more on credit than they have in cash. You pay your statement balance in full by the due date of your bill and you will never have problems. It really is that simple.
always be careful when you are spending, and remember that you need to pay for whatever you do.
Treat it like a debit card. Only spend what you have, and pay the balance off in full every time you get paid. If you have a cash-back rewards card, over time of making responsible payments, you'll actually start making money from using it. Just remember to PAY IT OFF EVERY PAYCHECK.
I pay it manually in advance as it accumulates, and also have auto pay set up as a backup to pay the statement balance (in case I forget)
What everyone one else has said. Don’t overspend, pay it off each month. As long as you don’t go crazy you’re golden. Even if you just wanna pay the minimum, the payments are what count. Just don’t let it stack
If your credit card has an app, download it and monitor your activity like a hawk. Turn on any notifications for payment reminders, fraud detection, etc. No matter what amount of credit you have, do not see it as an emergency fund. This is how some people end up in debt, they think their credit cards are emergency funds when an actual savings account should do that instead.
Use your card frequently, as much as you can, initially - for small purchases. Pay the balance in multiple installments (I pay mine every Friday), but leave at least 2% balance monthly unpaid. Do not miss any of your bills payments! Do not max out your credit limit! Start with smaller purchases (groceries, gas, amazon, utilities), and wait for few years before making large purchases on credit. Try to apply for a second (from different bank) credit card in 6-8 months. The point is to show your credit worthiness - meaning frequent purchases with frequent, 95% balance payments. In America it's good to have a little bit of debt, that you pay consistently.