How to Use a Credit Card: Guides & Tips

How to Use a Credit Card

Getting your first credit card can be a daunting experience. You probably know that using one can help you build a credit history so that you can get more favorable loan terms in the future. But if you’ve never used a credit card before, things like interest rates, credit bureaus, and account fees can feel overwhelming.

That’s why we’ve created this guide. It covers everything that you need to know about using a credit card as a beginner. From choosing the right credit card company to making sure that you don’t negatively impact your credit scores and derail your credit journey, we’ve got you covered.

Keep reading to learn more.

Credit Card: What Is It?

A credit card is a little rectangular card that looks like a debit card. However, when you use one, you essentially borrow money from the credit card issuer until you pay off your bill. This allows you to buy things and pay them off at a later date in exchange for interest payments on the balance due.

Some credit cards come with other features, such as credit card rewards, cash advances, and advanced protection from identity theft. But whether you get access to features like cash advance depends on the credit card issuers you choose and the credit cards you sign up for.

How Credit Cards Work

The first step towards getting a credit card is sending in an application to a credit card issuer. They’ll look at your credit history and then decide whether they’re going to give you a credit card and what your credit limit will be. Your credit limit is just the maximum credit card balance you can have on your account.

If you’re approved, then the credit card company will send you a card in the mail. You’ll be able to start using it after you activate your credit card account.

At the end of the first month, you’ll receive your first credit card bill (also called a credit card statement). This is the amount of money that you owe the credit card company based on the money you spent during the month and any interest charges you’ve incurred.

You can increase your credit score by making on-time payments and keeping your credit health at appropriate levels (which means keeping your outstanding balance relatively low). But if you don’t use credit cards responsibly, your credit rating can go down.

If you incur too much credit card debt, the money in your bank account could be garnished and your credit report is likely to go down. This can create a situation in which you aren’t able to qualify with many credit card issuers in the future.

That’s why it’s important to use your available credit responsibly from day one. You should also eventually qualify for a credit limit increase and a better grace period when you do this.

Pros and Cons of Credit Cards

Unlike debit cards, your credit utilization ratio is something you always need to be mindful of. There are several pros and cons to conducting balance transfers with a credit card account. We’ll cover the major ones in the sub-sections below. 


Build Credit

When you successfully make your minimum payments and cover the charged interest from your credit card spending, your credit history improves. This essentially shows most credit card issuers that you are trustworthy and can be counted on to make a minimum payment consistently.

If you don’t make credit card purchases, there’s no way to prove this to credit card companies. So if you want to increase your credit limit in the future, using a credit card for everyday purchases can be a big step towards getting the credit score you need to increase your total credit limit or available credit limit.

Be Prepared for Emergencies

Having a credit file also keeps you prepared for emergency expenses. If you have a sudden hospital bill or need to buy an emergency plane ticket, you’ll always have the fallback option of using your credit card and making monthly payments on the statement balance instead of having to come up with it all upfront.

Improve Average Account Age

One of the biggest factors that go into determining your credit score is your average account age. That means if you’re focusing on making your credit scores as high as possible, then opening up your first credit card and setting up some available credit lines is an important part of that.

Spend In-Between Paychecks

Most people receive paychecks only 1-2 times per month. That means there may be times when you’ve run out of money in-between checks. If you have a credit card, that won’t matter. Credit cards allow you to continue buying groceries and paying for gas in between your normal paychecks.


Interest and Account Fees

In exchange for giving you a line of credit, credit card companies charge an interest rate. These interest charges are added to the amount that you owe the company when you use your card.

In addition to your interest rate, you may also have an annual fee, balance transfer fee, intro balance transfer fee, and foreign transaction fees, among other account fees. That means you may end up paying significantly more for the purchases that you make with your credit line.

Potential to Go Into Debt

If you aren’t able to keep up with payments from billing cycle to billing cycle, then you’ll go into debt. Your remaining balance will continue going up as well since interest will still be applied to it based on your annual percentage rate.

Some companies offer a grace period for loyal customers. But you may or may not get one of these. It could create a situation in which your lack of payment history puts you into debt.

Credit Card Fraud

With credit cards, there’s always the risk of fraud and identity theft. Someone could take your card and start spending with it, pretending to be you. You’ll want to contact your credit card issuer immediately if this happens. But unless you can prove a lost or stolen card, you may end up still being responsible for the amounts spent.

How To Use a Credit Card

Using credit cards is a fairly straightforward process. You can use them both online and in-person in the same ways that you use debit cards – simply by entering the information in when prompted or by swiping credit cards on POS machines.

Some credit cards offer rewards for certain types of transactions, such as retail shopping trips or plane tickets. Chase Ultimate Rewards is one example of this.

It’s also worth bringing up secured credit cards here. A secured credit card is a card that you have to fund before you can use it. You’re essentially paying in advance for your credit line instead of after the fact. This can be a good option for new users who want to build up some payment history.

Credit Card Tips for a Beginner in 2023

How to Use a Credit Card (1)

Credit cards can be a little tricky – especially if this is your first time using one. The following tips should help you figure it out.

Read Your Card Agreement and Terms

It’s very important to read your card agreement and terms thoroughly before agreeing to a credit card deal. You might discover a higher-than-expected annual fee or an extra charge for balance transfers that makes you think twice about using the card.

If you don’t understand the terms of your agreement, then you may miss something important and your credit score could suffer as a result.

Make Payments on Time

It’s also super important to make your payments on time each month. If you don’t, you’ll face higher interest charges, and stiffer penalties and your credit score will go down as a result. The easiest way to do this is by setting up automatic payments so that you don’t have to remember to do it yourself.

Watch Out for Credit Card: Charges and Fees

It’s also worth familiarizing yourself with all of the different charges and fees your credit card comes with. For example, if you didn’t know you had a high foreign transaction fee, you might inadvertently decide to use your card while traveling. Knowing your charges and fees helps you save money.

Minimum Credit Card Payments

If you want to avoid interest, then paying off your balance in full each month is the best strategy. But you also have the option of making minimum credit card payments when you need to. You’ll face higher interest charges this way, but you’ll have more flexibility over your finances as well.

Monitor Your Credit

It’s also important to keep an eye on your credit score over time. Doing so will help you identify any late payments or excessive credit utilization that may be damaging your score. Plus, you’ll be able to spot fraud and identity theft immediately if you keep an eye on your credit.

Final Thoughts

Using a credit card is an important part of building credit. As long as you make consistent monthly payments and don’t over-utilize your card, your credit score should increase so that you can qualify for more significant loans in the future (including home and auto loans when you’re ready for them).

However, if you’re going to use credit cards, it’s important to do so smartly. Otherwise, you could end up facing high-interest charges, excessive fees, and other unwanted charges that could impact your financial present and future.

Depending on where you’re at in your credit journey, it could make sense to use a secured credit card before applying for a standard one. But either way, you’ll want to keep a close eye on your credit score and monthly charges to ensure you’re not missing anything that could be damaging to your finances.

Ultimately, using a credit card has a lot of benefits. Just make sure that you’ve done your research before signing up for one.

Frequently Asked Questions (FAQs)

What is a credit card?

A credit card is a rectangular plastic card that lets you spend money and pay it off at a later date. Using a credit card can be beneficial to your finances as long as you do so responsibly.

Does using a credit card help my credit score?

Yes, using a credit card will improve your score over time as long as you make your payments on time. But if you don’t make your payments on time, it could reduce your score.

What is a secured credit card?

When a credit card is secured, that means you’ve essentially deposited money to open up your account. For example, you might need to deposit $300 in order to get a $300 credit limit. This lets you build credit when you can’t qualify for a standard card. 

Should I open a credit card?

Opening a credit card account is a smart decision for most people. Doing so will help you start building credit and give you some emergency buying power to fall back on when you need it.



Bizreport - Kellan Jansen
Kellan Jansen, BA
Business Writer
Kellan works with businesses of all sizes to help them achieve their growth goals and has won several awards for his work in the space. He is especially focused on the fields of business finance and the developing cryptocurrency industry, regularly writing about both for audiences across the globe.


He is an organized and creative thinking sales management professional with experience in outside and inside sales in various markets. Working as freelancer in the Greater Boston Market, he moved to St. Louis and became an Account Executive, then a Sales Manager managing and coaching 12 sales reps covering a nationwide territory. He has developed his team with a combination of consultative selling and value before price coaching mindset which has won him a President’s Cup and many other financially rewarding awards at RICOH. His most recent role as a Continuous Improvement Manager provided insight into the importance of delivering a quality product in alignment with the value and reputation of his organization. It further enhances the aspect of selling on value as opposed to price.

+ 5 sources

Bizreport Advisor adheres to strict editorial integrity standards avoids using tertiary references. We have strict sourcing guidelines and rely on peer-reviewed studies, academic research. To ensure the accuracy of articles in Bizreport, you can read more about the editorial process here.

  1. FDIC: Credit Card Activities Manual. Accessed November 12, 2022.
  2. Interest | Accessed November 12, 2022.
  3. What is a credit score? Consumer Financial Protection Bureau. Published September 1, 2020. Accessed November 12, 2022.
  4. What is the difference between credit limit, available balance and current balance? Which do I use to check the available Transit Benefit on my TRANServe Credit Card? | US Department of Transportation. Accessed November 12, 2022.
  5. What Is a POS and Why Does Your Business Need One? What Is a POS and Why Does Your Business Need One? Accessed November 12, 2022.