11 Helpful Credit Card Tips For Beginners

When choosing your first card, there's a lot to think about, from interest rates to rewards programs and credit limits. The way you use your credit card may also have an impact on your credit score and shape your long-term costs. So, it’s important to understand how credit cards work and how you want to use them before diving in.

These 11 credit card tips and tricks may help you use credit cards responsibly and avoid common pitfalls.

1. Check credit reports and pre-qualifications before you apply

Before you fill out an application, it can help to take two key steps: reviewing your credit report and exploring pre-qualification options.

Credit reports

Your credit score typically has a big impact on whether you’re approved for a credit card, so checking your credit report may help you narrow down a range of credit cards that may be more likely to approve your application. If you don’t think your credit score is high enough, you may want to work on improving your credit score before you apply for a credit card.

Credit pre-qualifications

Another way to go about this is using credit card pre-qualification. Although it isn’t a guarantee of approval, getting pre-qualified may help you understand if you’re likely to be approved for a given credit card. Plus, it generally won’t impact your credit score.

2. Don’t apply for several credit cards at once

When you apply for multiple credit cards in a short period, it can have a negative impact on your credit score. Each time you apply for a new credit card, the issuer will perform a hard inquiry. Hard inquiries may lower your credit score by a few points for up to a year and can stay on your credit report for up to 2 years. Looking for credit cards that meet your various needs and spacing out applications may help preserve your credit score.

3. Pay off your entire statement balance each month

Paying off your entire statement balance by the due date each month has several benefits. First, you can avoid paying interest on your credit card purchases. Second, it may help improve your credit score and show lenders that you’re a responsible borrower who pays your debts in full and on time. Finally, it can generally help you avoid late fees and penalty APRs.

4. Keep your credit utilization low

Your credit utilization is the percentage of your total available revolving credit that you’re using. When you keep your credit utilization low, you show creditors that you’re a responsible borrower, and it may help raise your credit score. Paying down your balances, updating your income information with creditors and keeping old credit cards open may help you lower your credit utilization.

5. Pay more than the minimum

Ideally, you pay your credit card statement balance in full each month. But if you can’t, you might consider paying more than the minimum to reduce debt and interest charges. Your credit card statements may detail how long it would take to pay off your balance and how much interest you’d pay, assuming you don’t add charges to that credit card and only make minimum payments. Alongside your budget, that may help you decide how much you want to pay toward your credit card balance.

6. Use a spending analyzer to calculate your budget

Some credit cards offer a spending tracker that may show how your spending breaks down by category. If you're trying to get a handle on your spending, these can be helpful tools, giving insights into where you're spending your money and helping you identify ways to cut back.

7. Maximize the benefits from credit card rewards

Some credit cards offer you the opportunity to earn points or miles that you can redeem on rewards, but the best options for you may depend on your spending habits.

There are many different rewards cards out there. When trying to find a suitable card for your needs, consider what kind of rewards make sense for your lifestyle. For example, you might want a card that offers travel rewards if you travel often.

8. Reduce interest with low intro APRs

If you’re looking to make a big purchase that you foresee being able to pay off relatively quickly, a new credit card with a low introductory APR offer could help reduce what you owe in interest. Alternatively, a credit card you already have may occasionally have a low promotional APR offer.

9. Use autopay to possibly avoid late payments

Payment history is generally an important factor in your credit score. Late payments can have a significant negative impact on your credit score, depending on how long these payments are overdue. The longer you can maintain an on-time payment streak, the better it is for your credit.

Signing up for autopay may help ensure you make your credit card payments on time each month. Autopay is a feature that allows you to automatically pay your minimum payment due, or some other portion of your credit card balance, and potentially set the frequency of those payments.

10. Use credit cards for needs, not wants

When it comes to using credit cards responsibly, one helpful strategy is limiting that spending to needs, rather than wants. Credit cards can quickly lead to significant debt, including high interest charges, if they're not used carefully. By sticking to the spending needs you’ve accounted for in your budget, you may minimize the costs associated with your credit cards.

11. Check your credit reports regularly for errors

It's important to check your credit reports regularly for errors as those may impact your credit score, which could make it harder to qualify for credit later. You can get 1 free credit report from each of the 3 major credit bureaus every 12 months. The credit bureaus are also offering free weekly reports. If you find an error, you may dispute it with the credit bureau listing that information, as well as the lender that provided it.

Why do credit card tips matter?

Credit cards can be a convenient way to make purchases, but to use them responsibly, it’s important to first understand how they work. Learning the ins and outs of credit cards may help you take full advantage of your credit card features, build credit and avoid unnecessary interest charges. That way, you can focus on what really matters: pursuing your other financial goals.