It’s no secret that credit cards can be a useful financial tool. They offer the flexibility to finance things you need and often provide valuable perks like cash back or travel points.

However, credit cards are a double-edged sword. If not managed properly, they can be detrimental to your financial health. Mismanaging credit cards is a common problem: Outstanding credit card debt recently reached its highest level since July 2008, surpassing $1 trillion in the first quarter of 2017.1

If you’re a credit card user, here are three tips to keep in mind to help you reap the benefits without sinking into debt: 

Know your credit score and what goes into it.

Credit scores are used to evaluate your financial history and gauge whether you’re responsible with credit. A good score can help you obtain a loan, secure a low interest rate, or get approved to rent an apartment.

Payment history makes up about 35% of your overall score, which means that missed payments, even if by just a few days, can dock your score significantly.2 Set calendar reminders or automatic payments to help you stay current, and keep track of the funds in your bank account to ensure that you have enough to cover your regular payments.

Another factor in determining your credit score is your “utilization ratio,” which is the credit available to you versus how much debt you’re carrying. This ratio accounts for about 30% of your credit score,3 so using a high percentage of your available credit can also reduce your score. You can avoid that situation by paying off your balance each month.

Regularly monitoring your credit report can help prevent you from becoming a victim of identity theft and credit card fraud. Watch for unauthorized purchases, approvals or denials you didn’t request, or fraudulent applications submitted in your name.

Beware of high interest rates.

In exchange for offering you access to funds, credit lenders ask for a percentage of what you borrow when paying back the loan. This is your interest rate. Rates can vary greatly based on many factors, including the type of purchase, the amount you want to borrow, and your credit score.

To attract new customers, lenders frequently offer very low introductory rates that then increase to a market rate after a certain period. For example, a credit card might start with 8% interest for 90 days and then jump to 16%. Before signing up for a new credit card, look for that information and take note so there are no surprises. In many cases, rates can be shopped or negotiated, which means you must be proactive if you want to get the best deal.

While it may sound clever to move your balances from one introductory offer to another to avoid high interest rates, this can be a risky strategy. Terms and conditions are often complicated, and constantly moving from one card to another increases the likelihood that you’ll overlook something and end up paying more than you thought you would in fees, penalties, or other expenses. So, if you take this approach, be diligent in understanding a lender’s terms on different balance types, activities, and commitment terms.

Cash in those rewards.  

According to a recent study, rewards remained at the top of the list for what people considered the most attractive card feature on their preferred credit cards.4 Cash rebates continue to be most preferred by customers given the flexibility they offer, but other types of reward programs can include gift cards, travel, merchandise, or dining.

Surprisingly, another recent study found that 31% of credit card users aren’t redeeming their rewards!5 If you fall into this camp, you’re missing out. Credit card rewards typically lose value over time as the same perks start requiring more points. Cash in regularly to take advantage of the rewards your card offers.

There’s no doubt that credit cards can be helpful. But if they’re mismanaged, they can do you more harm than good. Keep these three credit card tips in mind so you can spend smart and make your credit card work for you — not the other way around.


1 Dickler, J. (July 11, 2017). Credit card users rack up over $1 trillion in debt. CNBC. Retrieved September 29, 2017, from
2, 3 Weliver, D. (August 30, 2016). How Credit Works: Understand The Credit Reporting System. Money Under 30. Retrieved August 15, 2017, from
4 2016 U.S. Consumer Payments Study. TSYS. Retrieved August 15, 2017, from
5 3 in 10 Have Never Redeemed Credit Card Rewards. Bankrate. Retrieved August 15, 2017,  from