How to Use a Credit Card Responsibly

Contributor, Benzinga

Building credit can unlock important keys for your future, like the ability to buy a car, house or even commercial real estate. If you’re new to credit cards, you may be surprised to know that even experienced cardholders don’t know exactly how a credit card works. 

Recent data from the Federal Reserve cites personal U.S. credit debt at $870 million — an all-time high. But when used responsibly, a credit card can be a valuable tool to manage money, build credit and earn rewards.

Ready to build your credit and learn how to use a credit card responsibly? Here’s how to do it.

Main Takeaways – Using Your 1st Credit Card:

Before you get started building credit, go in with clear goals for your use. Here are some ground rules to get you started:

  • Decide what terms and rewards you want with your card. This includes the interest rate you’re offered on payments, if there is an annual fee, whether you get cash back on purchases and more.
  • Prepare to apply for approval. You will have to apply for your card and disclose personal information that includes your Social Security number, current salary and other factors.
  • Properly using your credit means learning how to pay off your bills. We explore options for payment below.

How to Find the Right Credit Card

A simple Google search can show you that there are hundreds of credit card types to choose from, and it can be difficult to find the right one.

Be sure to consider the following factors before you make your decision:   

  • Annual percentage rate (APR). This is the price you pay for borrowing money. Your interest rates are known as your yearly rate. You can avoid paying interest on purchases if you pay your balance in full each month by the due date. 
  • Annual fee. Some cards have no annual fee and others range from $25 to a few hundred dollars. You can get this fee waived just by asking the carrier — just ask.
  • Rewards programs. Earn points for your next airline tickets, hotels or gift cards to your favorite stores.   
  • Grace period. This is the number of days you have to pay your bill in total before finance charges kick in. A grace period usually lasts between 21 and 25 days, and a payment due date is the same every month. Be sure to bookmark your credit card due date if you want to avoid paying interest.  
Sofi Credit Card Sofi Credit Card
get started securely through Sofi Credit Card’s website
Annual Fee
Regular APR

13.24% – 25.49%

1 Minute Review

Earn 3% cash back for a year when you set up direct deposit with SoFi. After that, earn 2% unlimited cash back on purchases when redeemed toward investing, saving, or paying down an eligible loan with SoFi. Plus, redeem points toward crypto. There is no annual fee with the SoFi credit card.

  • Annual Fee: None
  • Intro APR: None
  • Welcome Bonus: None
  • Smart spending and budgeting tools
  • Mastercard ID theft protection
  • No minimum to redeem for cash back
  • No intro APR
Luxury Card Luxury Card
apply now securely through Luxury Card’s website
Disclosure: Terms and Conditions apply*
Annual Fee
$495 ($195 for each Authorized User added to the account). Terms and conditions apply*.
Regular APR

For Titanium, Black and Gold Cards: Ongoing Purchase APR 16.49%; Cash Advance 26.74% (variable)

1 Minute Review

There’s something uniquely satisfying about the crisp click a weighty credit card makes when you set it down on the counter to pay. It just feels like luxury.

Weighing in at 22 grams (the heaviest cards out there), Luxury Card’s heavy metal credit cards deliver a VIP experience to its cardholders 24/7. Unlike other executive-level cards, anyone can apply for 1 of its 3 cards instead of waiting for an invitation. Each Mastercard Titanium Card is designed with a unique brushed stainless steel front and carbon back. With 70 patents issued globally, Luxury Card leads the industry in metal card design and construction by combining advanced technology and design principles to create durability and distinction. Every detail of your card reflects excellence and represents the exclusivity of your membership.

Each Mastercard Gold Card is made with a 24K-gold-plated stainless steel front and carbon back.

Each Mastercard Black Card is designed with a unique black-PVD-coated stainless steel front and carbon back.

With premium rewards, industry-high airline and cash back value redemption, dedicated concierge-style customer service and more, the Luxury Card Mastercard® Gold Card, Mastercard® Black Card and Mastercard® Titanium Card will make you feel like a million bucks (even if you’re still working on that 1st million).

Terms and Conditions apply.*

  • Annual Fee: $495 ($195 for each Authorized User added to the account). Terms and conditions apply*.
  • Intro APR: For Titanium, Black and Gold Cards: 0% for balance transfers, after that, 16.49% for transfers that do not post within 45 days of opening the account. This APR will vary with the market based on the prime rate.
  • Rewards: Titanium Card: 1% cash back redemption that can be deposited directly into a U.S. bank account or used as a statement credit, with no thresholds for redemption—points do not expire as long as the account remains active and in good standing. Gold Card: 2% value for airfare redemption and 2% value for cash back redemption, earning 1 point for every dollar spent; 1.5% value for cash back on the Black Card.
  • Earn one point for every dollar spent
  • Industry-high reward redemption values
  • Top-tier customer care with Luxury Card Concierge
  • Flexible rewards
  • Higher annual fees
Indigo Credit Card Indigo Credit Card
apply now securely through Indigo Credit Card’s website
Annual Fee
$0 to $99 based on credit worthiness
Regular APR


1 Minute Review

The Indigo Mastercard® is designed to give you a quick answer when you apply and serve your needs irrespective of your career path, hobbies or financial situation. Even if you have a difficult credit history or no credit at all, you can apply and start a new journey building or rebuilding your credit. The card reports to the credit bureaus every month to improve your score, and there’s no security deposit due when you are approved.

  • Annual Fee: $0 to $99 based on credit worthiness
  • Minimum Payment: ~10% of total balance
  • One Time Fee: $0
  • Intro APR: N/A
  • Rewards: N/A
  • Welcome Bonus: N/A
  • Pre-qualification doesn’t affect your credit score
  • Use the card wherever Mastercard® is accepted
  • No security deposit
  • No rewards program
Milestone Gold Card Milestone Gold Card
get started securely through Milestone Gold Card’s website
Annual Fee
$35 to $99 based on credit worthiness
Regular APR


1 Minute Review

The Milestone Mastercard comes from Mastercard. Mastercard, located in New York, works to integrate new technology with banking. The APR rates are around 24.9% for credit lines of $300. However, the card has no stated rewards or bonuses and charges higher APR fees with limited benefits.

  • Annual Fee: $35 to $99 based on credit worthiness
  • Minimum Payment: No security deposit
  • One Time Fee: None stated
  • Intro APR: None stated
  • Rewards: N/A
  • Reports monthly statements to three different credit bureaus
  • Offers 24/7 account access
  • No minimum security deposit
  • Allows people to be pre-qualified
  • Annual fees
  • No rewards or bonuses

Getting Approved for a Credit Card

Lenders will look at your credit profile and other things, like income or debt-to-income ratio, which is the relationship between how much debt you have to how much income you bring in. Let’s take a closer look at the process so you can get the approval you’re looking for.    

What information you’ll need 

You’ll be required to provide your name, date of birth, address, Social Security number, whether you rent or own a home, employment status, sources of income and total annual income. Your income is always important because it can indicate whether you’ll be able to pay your bills and how much credit you’ll be given. 

The application process

Once you’ve decided which card you want, you must fill out an application. This is a simple and straightforward process, whether it’s on paper or online. Before you fill out your information, be sure to read the card’s terms and conditions.

All rate and fee disclosures are available for review. You have every right to see this information before you make a commitment with a credit card provider.  


Once you get approved for a particular credit card, one of the first things you should know about your new card is your credit limit. This is the maximum amount of money you can charge to your card. Your interest rate is also important because it affects the cost of carrying a balance on your card. 

Most credit cards will give you a reason to use their card, usually in the form of rewards such as cash, points or miles. How does this work? Generally, you earn a certain number or percentage for every dollar you charge on your card. 

Spending Money on Your Credit Card

You might feel you can swipe and have anything you want at a moment’s notice. But it’s important to be mindful of how you spend your hard-earned money; start by learning how to create a budget

Utilization rates

Your credit utilization is how much of your available line of credit you use any given time. To figure out what your utilization rate is, simply divide your credit card balance by your total card limit. The ideal overall credit card utilization is below 30%. 

Where you can spend 

You may be surprised to find some businesses accept certain credit cards but not others. This normally has to do with the fee structure the merchant (especially mom-and-pop shops) must pay.

That’s because when you use your credit card, the merchant must pay a processing fee for each transaction, so you may find yourself pulling out an American Express card to pay for something when the business you’re purchasing from only accepts Visa.

Be sure to check with the merchant before you shop.

Where you should and shouldn’t spend 

It’s obvious that the world is moving from cash payments to digital payments. But when is the best time to use your credit card? When you’re traveling, a credit card is perhaps the best payment method you can use.

From booking your trip to paying for your hotel and rental car, you can earn rewards or cashback for things you’re going to buy anyway. You also get a little extra security if you lose your card because there’s no liability for fraudulent charges, and you can cancel or freeze your card at any time. 

When you travel out of the country, you’ll get better rates for foreign exchange fees than buying currency with American dollars. There are also places in the world where you might not want to use your card. For example, flea markets are a good place to use cash.

Never use your card on a website if you’re not familiar with the site or if the site has an obscure foreign extension.  

Spending and rewards

Credit card rewards are different for each card, but almost all of them give you a benefit for using your card more. Points rewards tend to equal 1 point for each $1 you spend.

The best reward credit card programs are usually available to consumers with the highest credit scores, but in general, you can earn a certain number or percentage of rewards for every dollar you put on your card. Some cards will reward you for spending in a particular area or only give you rewards based on specific purchases.   

Paying Your Credit Card Off

Americans are close to a trillion dollars in debt. In 2018 alone, they paid over $104 billion in credit card interest and fees. More than 40% of all households in the U.S. carry credit card debt, and the average American household carries a balance of $6,375.

Do you find yourself a part of this group? If so, it’s a good idea to limit your spending and formulate a game plan to pay down your bills.  

When you should pay it off

Each month, your payment must be made by a certain date established by your credit card issuer. This is 1 of the most important credit card rules to follow, as it is your official payment due date. You don’t want to miss it or you’ll be charged with late fees.

Timely payments also help you build a good credit score. 

The easiest way to figure out when your credit card bill is due is to carefully read your credit card billing statement. Making your payments early (and in particular, a few days before the due date each month) is the best way to make sure your payment arrives on time and keeps your account in good standing.  

Interest and other fees

It’s also important to know how credit card interest rates work.

Your yearly rate is better known as APR or annual percentage rate. Credit card companies use it to determine the interest charge on your monthly statement. There are two kinds of APR: a fixed APR usually remains the same but can change in specific circumstances, such as when an introductory offer ends or your payment is more than 60 days late. 

A variable APR changes with the prime rate. Many variable rates begin with the prime rate, then add a margin, which is your variable APR. Other types of APR you’ll want to know about are purchase APR, balance transfer APR and cash advance APR. 

Use Credit Cards the Right Way

Today, there are almost 480 million credit cards in circulation. That’s 100 million more than a decade ago. Though Americans swipe at a record pace, it doesn’t mean you have to go into debt. Your credit card can be a powerful financial tool if you use it the right way.    

Want to learn more about credit card and money best practices? Check out how to pay off your credit card debt, or our guide to the best budget apps to keep your finances in order.