Credit Card Basics — Using Credit Cards Responsibly

Using Credit Cards Responsibly

Whether you use your credit card to buy a computer or a cook book, good credit habits are essential to building and protecting your credit history.

A credit card can be a valuable tool if it is used responsibly:

  • They offer convenience and flexibility—allowing you to buy now and pay later, either by paying in full the end of a billing period or by making payments over time.
  • They can help you build a solid credit history—essential when you apply for a car or home loan.
  • They can provide peace of mind—knowing that you have access to money in case of an emergency.
  • They have also become essential to making certain kinds of purchases and plans—for instance if you want to reserve a hotel room or rent a car you usually need to use a debit or credit card to complete the transaction.

In order to maintain the ability to have a credit card (and your good credit) you must use it responsibly. Responsible credit card use means doing the following:

Make payments on time

Make it a priority to pay your bill on time, every time. If you are late or miss a payment, your account will accrue late fees and additional finance charges. Late and missed payments show up on your credit report, and can significantly lower your credit score.

Pay more than the minimum

Your monthly credit card bill should include information about how long it will take you to pay off your balance if you only make minimum payments. Take note of how much money you can save by paying more than the minimum each month.

Read your card agreement and other materials carefully

When you open a new credit card account, read the cardholder agreement thoroughly. Credit card companies will also send you notices called “changes in terms” 45 days in advance of making changes to the fees, interest rate and other important information about your card. Reading these notices can help you decide whether or not you want to change the way you use the card.

Check monthly statements for accuracy

Mistakes can and do happen. You can help protect your credit by checking your statements carefully either online or as soon as they arrive in the mail. If you find an error on your bill, call your credit card issuer right away to let them know.

Stay below your credit limit

“Maxing out” your credit card, or carrying a balance that exceeds 70–75 percent of your credit limit, appears as a warning sign on your credit report and could harm your credit score. It’s important to know your credit limit, and stay well within it.

If you want your credit card company to allow transactions that would take you over your credit limit, you must let them know by opting-in to overdraft protection for your card. Otherwise, if a transaction would take you over your limit, it may be turned down.

If you do choose to allow transactions that would take you over your credit limit, your credit card company can impose one fee per billing cycle. You can revoke your opt-in choice at any time.

Report a lost or stolen card immediately

If your credit card is used without your permission, you can be held responsible for up to $50 (although many credit card issuers offer $0 fraud liability). However, if you report the loss before the card is used, you won’t be held responsible for any unauthorized charges. To minimize your liability, report a loss as soon as possible.

Most credit card issuers have 24-hour toll-free telephone numbers to accept emergency information. It’s a good idea to follow-up with a letter: include your account number, the date you noticed your card missing, and the date you reported the loss and keep a copy of the letter for your files.


Why is your credit score so important?

Download this PDF to learn how your credit score affects your life

Learn how your credit score affects all aspects of your life.

Free Credit Score brochure (668 KB PDF)

Get Adobe Reader

This site is for education purposes. The material provided on this site is not intended to provide legal, investment, or financial advice or to indicate the availability or suitability of any Capital One product or service to your unique circumstances. For specific advice about your unique circumstances, you may wish to consult a qualified professional.