What are the Best Practices for Using a Credit Card?

For some people, the idea of using a credit card is downright frightening.

It’s not uncommon to be afraid of credit. After all, you may have heard horror stories about people who rack up debt at high interest rates.

But a credit card can be a valuable financial tool if you stick to a few best practices. Before your next purchase with plastic, learn how to make the most of a credit card without running into a scary scenario.

1. Open your first credit card account early.

It may seem counterintuitive, but the sooner you get a credit card, the better—as early as your teen years.

In general, the minimum age to open a credit card is 18 years old. Many experts say that’s exactly when you should open your first account. Starting an account early allows you to begin establishing good credit from a young age. This can be useful later in life when good credit can help you rent an apartment or take out a loan for a car or home purchase.

Some credit cards for young adults and first-time cardholders offer built-in protections. Look for cards with low credit limits, for example, which can help you avoid the temptation to spend more than you can afford.

2. Pay bills on time.

One of the most important factors in establishing a strong credit score is the practice of paying bills on time. By paying at least the minimum balance on your credit card every month, you’ll stay on track—but if you can, it’s best to pay the full balance. More on that below.

3. Strive to pay off your balance each month.

When you receive a credit card statement at the end of the month, you’ll see a minimum payment due. In some cases, the minimum is less than your entire balance.

But if you only pay the minimum and you don’t pay the full balance each month, you could end up owing interest or fees in the future. In some cases, this can lead to snowballing debt that becomes hard to manage.

Instead of paying the minimum, aim to pay off your entire credit card balance. That way, you’ll stay on track and avoid accruing debt. You can even make credit card payments early for extra peace of mind.

4. Treat your credit card like a debit card.

For some people, it helps to think of a credit card like a debit card.

Would you ever use your debit card to buy something that costs more than you currently have in your account? The answer is no (at least not on purpose)!

Before you make a purchase with credit, ask yourself if you would be able to afford that purchase today with your debit card. While credit cards provide some advantages that debit cards don’t provide, you want to avoid using credit to make purchases you can’t truly afford to pay back.

If you’re in the market for a credit card, WaterStone Bank has a multitude of options to fit your needs. Check out the options via wsbonline.com, or contact our Customer Support Center at 414.761.1000.