Get smart about spending: Using a credit card wisely

Are your credit cards collecting dust or racking up frequent “swiper” miles? Whether your cards are dormant or constantly in use, you may be guilty of common credit card blunders that are costing you precious time and money. But learning how to use a credit card wisely can help ensure you’re taking full advantage of its benefits. We’ll show you how.

Reap this benefit: Convenience Like cell phones, the Internet, and GPS, credit cards can help make life easier. Using a credit card for purchases means you don’t always have to carry a checkbook or lots of cash, and you can avoid unnecessary trips to the ATM.

A word to the wise: With great convenience comes great responsibility, so while your credit card can definitely make purchasing easier, be careful not to use it as a stand-in for cash if you’re not keeping close track of your spending. This can get you in over your head (and over your monthly budget) in a hurry.

Reap this benefit: Building your credit history Using your credit card regularly and paying your bill on time shows creditors you’re trustworthy and can give your credit rating a positive boost.

A word to the wise: Besides just paying on time, it’s also important to pay in full if possible. “The greatest rule of thumb is to pay off your credit card every month,” says Julie Bruning, Vice President of Consumer Lending at Cobalt CU. “There are unexpected expenses that come up in every stage of your life, so if you are unable to pay it off monthly, it’s important to shop for a card that has a good interest rate and no annual fees.”

Reap this benefit: Fraud protection If your wallet full of cash is stolen, those greenbacks are gone. But if your credit card is lost or stolen, the max you’ll have to pay (by law) is $50, and most credit card companies waive this fee. And if you report the lost or stolen card before it’s used, according to the Fair Credit Billing Act, you aren’t liable for charges you didn’t make.

A word to the wise: Always check your bill each month and report any suspicious purchases, and if your card goes missing, report it immediately. Also, don’t forget the importance of checking your credit score, which you can do up to three times each year (once per year from three credit reporting agencies) for free at

Reap this benefit: Earning rewards It’s nice to be rewarded for learning how to use a credit card wisely. For instance, you can earn perks for the purchases you’re going to make anyway by using a credit card that offers rewards. “I’m in favor of using rewards cards because of the many benefits you can gain, like cash back and redeeming points for merchandise you wouldn’t normally buy for yourself,” Bruning says.

A word to the wise: Just as with any credit card, be sure to pay off reward cards in full whenever possible. That way, penalties won’t overshadow those benefits.

When it comes to credit cards, strict avoidance isn’t the only way to keep your finances in order. Used wisely, credit cards can offer big benefits. All it takes is a little forethought and know-how.

Learn more using a credit card wisely and building credit by downloading our free e-book.