7 Tips on How to Use a Credit Card Responsibly
A credit card can be a valuable tool if used responsibly. Here are some tips to keep in mind
It’s easy to get in the habit of using a credit card when you make purchases. It can be a simple and fast way to pay—whether you like the convenience of not carrying cash or are all about earning rewards when you spend. But what about your other credit card habits? Are you using your card in a way that helps—or hurts—your credit?
Protect your finances by following these general guidelines:
1. Read Your Card Agreement and Know Your Terms
When you open a new credit card account, be sure to carefully read the credit card customer agreement and the account opening disclosures. This way, you’ll know what to expect when it comes to due dates, fees, interest rates and other information.
2. Make Payments on Time
As the Consumer Financial Protection Bureau (CFPB) explains, you should make your payments on time, every time. That’s because your payment history is an important factor when it comes to your credit scores. And missed or late credit card payments can not only affect your credit—they can lead to late fees and interest rate increases, too.
You could consider setting up automatic payments or electronic reminders to help you make sure you pay on time.
3. Pay More Than the Minimum
Making your credit card minimum payments on time every billing cycle helps you avoid penalties and fees. And paying the minimum keeps your account in good standing. But if you only pay the minimum, you’ll be carrying a balance. And you’ll be charged interest on that balance.
Those interest charges can make it harder to pay off your credit card debt. So take it from the CFPB: “If possible, pay off your credit card bill in full each month.”
4. Stay Below Your Credit Limit
Only use the credit you really need. Better yet, stay well below your credit limit.
Why? Your credit scores could be affected by your credit utilization ratio—how much of your available credit you’re using. And the lower your credit utilization ratio, the better your credit score might be. In fact, the CFPB recommends using no more than 30% of your credit limit.
5. Check Your Monthly Statements Carefully for Accuracy
Regularly checking your credit card statements—either online or when they arrive in the mail—can be a great way to keep your spending top of mind. It can help you spot transactions you don’t recognize. And that could help protect you from fraud.
If you do spot an unauthorized charge, report it to your credit card issuer immediately. The sooner you notice and report credit card fraud, the quicker you can stop any unauthorized spending in your name.
Capital One even has a number of credit card security features that can help you protect yourself from fraud.
When you set up instant purchase notifications in the Capital One Mobile app, you can receive an alert any time a transaction is approved on your card.1 And Eno, your Capital One assistant, helps protect your account by monitoring your transactions and reaching out when it spots something that seems out of the ordinary.2
6. Report a Lost or Stolen Card Immediately
Report your card lost or stolen if you’re missing your card or think someone stole your account number. When you do, your card issuer will deactivate your old card so no one else can use it. And you can tell the issuer if there are purchases on your account that you didn’t make.
Many card issuers offer $0 fraud liability, which means you won’t have to pay for unauthorized charges if your card is ever lost or stolen and used without your permission. So be sure to report a loss as soon as possible.
If you lose your card or suspect that it’s been stolen, you may be able to lock your card to prevent it from being used. At Capital One, for example, you can instantly lock your credit card with just a few taps on the Capital One Mobile app. And if you find your card, you can unlock it just as easily.3
7. Monitor Your Credit
It’s always a good idea to keep a close eye on your credit. Monitoring your credit can help you keep track of where you stand. And it’s another way to help you spot errors and potential fraud attempts that could be hurting your credit.
One way to monitor your credit is by using CreditWise from Capital One. With CreditWise, you can access your TransUnion® credit report and weekly VantageScore® 3.0 credit score—without hurting your score. CreditWise is free for everyone. You don’t even have to be a Capital One customer to enroll.4
You can also get a free copy of your credit report from each of the three major credit bureaus—Equifax®, Experian® and TransUnion. Visit AnnualCreditReport.com to learn how.
Building, Rebuilding and Maintaining Credit With a Credit Card
No matter where you are on your credit journey, there are credit card options for you.
Credit Card Options for Building and Rebuilding Credit
Or you could consider becoming an authorized user on a trusted friend’s or family member’s existing credit card account. Since many credit card issuers report authorized users’ activity to credit bureaus, using the credit card responsibly could help you build or rebuild your credit.
Credit Card Options for Maintaining Good Credit
If you already have a good credit score, you may have even more credit card options. And those options could even come with added perks. For example, using your card responsibly could help you earn cash back or travel rewards.
Use Your Credit Card to Help—Not Hurt—Your Credit
Whether you’re building, rebuilding or maintaining your credit, a credit card can be a valuable tool—if you use it responsibly. Doing things like making on-time payments, paying more than the minimum, only using the credit you need and monitoring your credit can help ensure that your credit card use is helping—not hurting—your credit.
1Notifications must be enabled following the steps described to be received. While we will do our best to deliver notifications, please be aware that due to system issues or limitations with your technology or ours or other unforeseen circumstances, notifications may not be delivered as expected or intended and may be delayed. Please make sure you are checking your account regularly and not relying only on notifications.
2Eno is learning all the time and may not catch everything. Eno service outages may occur. Capital One customers are responsible for regularly checking their account statements. Web access is needed to use mobile banking. Some or all features may not be available to all Capital One customers, depending on the types of accounts held. For example, email alerts and app alerts are not available for retail partner credit cards and may not be available for all Capital One co-brand partner credit cards. Check with your service provider for details on specific fees and charges. Texting with Eno means you agree to chat about your account over SMS and receive recurring messages. Message and data rates may apply. Mobile phone carrier fees for text messages may apply.
3Some activity may continue, including returns, credits, payments, interest, dispute adjustments, other account fees, purchase transactions during system downtime and certain other exempted transactions.
4Your CreditWise score is calculated using the TransUnion® VantageScore® 3.0 model, which is one of many scoring models used by lenders. It likely won’t be the same model your lender uses, but it is an accurate measure of your credit health. The availability of the CreditWise tool depends on our ability to obtain your credit history from TransUnion. Alerts are based on changes to your TransUnion and Experian® credit reports and information we find on the dark web. The tool is not guaranteed to detect all identity theft.
Government and private relief efforts vary by location and may have changed since this article was published. Consult a financial adviser or the relevant government agencies and private lenders for the most current information.
We hope you found this helpful. Our content is not intended to provide legal, investment or financial advice or to indicate that a particular Capital One product or service is available or right for you. For specific advice about your unique circumstances, consider talking with a qualified professional.