When you sign up for a credit card you agree to the rules imposed by the provider, and they are in it to make money. Late fees, interest rates, over-limit fees and annual fees can cost you money and have a negative impact on your credit score and credit reports. But you can avoid all of this by using your card wisely. Use your credit card as a tool to build credit and earn cash back and reward points.

Should You Have a Credit Card

Credit cards are an excellent financial tool if used properly, if not used properly they will have a negative impact on your credit and finances. Proper use means paying your bill in full and on time every time. If you cannot commit to that you should probably not be using a credit card.

Choose Your Card Carefully

Don’t sign up for every credit card you are offered, having one or two quality cards is enough. Look for a card with no annual fee, a low interest rate, rewards points and cash back that meet your needs and one that offers the most benefits which can include travel insurance protections, purchase protection, extended warranty, cellphone insurance and rental car insurance.

Pay On Time Every Time

With online access you can easily log in and view your account balance and statements, when your charges are posted make a payment, doing this allows you to keep up on payments without waiting until the end of the month when you may have a larger balance. You don’t have to wait for the due date you can pay as soon as charges post. This keeps your credit utilization low which can help to increase your credit score.

Stay Below the Limit

All credit cards have a credit limit, but that does not mean you should allow your balance to reach that limit. Most financial experts recommend keeping your credit utilization under 30% but the lower the better and a zero balance is the best, you can maintain a zero balance by paying off the full balance at the end of each billing cycle. Credit utilization is a major factor in determining your credit score.

Don’t Use Credit Cards to Buy Stuff You Can’t Afford

Imagine that your credit card is like cash, you cannot purchase something with cash unless you have enough money to pay for it, think of your credit card the same way. Credit card companies make money when people spend more than they can afford to pay. Overspending leads to poor credit which can impact more than just your credit score, you can be denied a loan or other forms of credit or pay higher rates on insurance if you have a low credit score. When you make a purchase and use your credit card to pay make sure you have enough cash on hand to pay the balance in full before the due date.

Monitor Your Credit

Check your credit reports and your credit score regularly. You are entitled to a free copy of your credit reports with all three major credit bureaus, Equifax, Transunion and Experian. Go to https://www.annualcreditreport.com/ to request your free copies.

You can check your credit score by logging into your bank account, most banks post your score, your credit card provider may also offer access to your credit score, and you can use sites like Credit Karma and Credit Sesame to monitor your score.

Freeze your credit with all three agencies. Freezing your credit is one of the best ways to protect yourself against financial and identity theft.