Credit cards are a useful tool for both establishing credit and having emergency funds. Unfortunately, it’s easy to get caught up in unnecessary spending, which can rack up debt quickly. Use these 5 tips for using a credit card to enjoy the benefits for years to come.


Avoid Using Credit Cards for Cash Advances

While the available funds can often be handy, using your credit card at the ATM is significantly more expensive than using your card directly. In many cases, not only do you pay interest on the cash you withdraw, but you’ll most likely pay an ATM fee as well. These withdrawals can add up quickly, and have you paying far more for cash than just your card’s interest rate.


Pay off Your Balance Whenever Possible

At the end of each payment cycle, usually 30 days, the interest of your balance is applied. If you pay off your balance in full each month, there is no interest to be applied. This not only gives you a stellar credit rating, but allows you to have the credit card balance available to you in times of emergency.


Limit Your Use of a Credit Card

If you’re establishing or re-building your credit, limiting your purchases is a great way to keep the card in good standing. Consider using your card for necessities like gas or your cell phone bill. This keeps your balance rotating. At all costs, you should avoid using a credit card to treat yourself. Buying TV’s, computers and other expensive items that you wouldn’t be able to normally afford can leave you strapped when it’s time to pay the bill. The end result is interest fees that make your purchase even more expensive than originally presumed.


Try to Keep Your Balance at Less than 40% of Your Credit Limit

Credit bureaus looks at several factors to determine your credit score. The ability to consistently make payments and keep your balance low is one of the easiest ways to establish or improve your credit. Ideally, the major credit bureaus recommend that you keep your balance to 30-40% of your total available credit.


Always Keep Tabs on Your Account

The convenience of automatic payments is one that can cause us to lose sight of our account security. If your card number is stolen or ripped off a card reader, failure to keep an eye on your account could mean months before you see any issues. By the time you notice credit card fraud, it may be too late to report it to your credit card company. Check your card account with your banking institution at least once per week to maintain a vigil eye on the activity and prevent fraudsters from ruining your well-established credit.


A credit card should, under no circumstances, be considered “free money”. Not paying your credit card can leave you with more debt than expected, as well as relentless calls from collection agencies. Use a card wisely and you’ll find that you’ll have a higher balance available, and a credit score that sets you up for future decisions like automotive and home purchases.