Using Your Credit Card Responsibly to Build Credit

Here are a few tips on how to use your credit card responsibly and how to use a credit card to build credit.

By Louis DeNicola | American Express Credit Intel Freelance Contributor

5 Min Read | June 26, 2020 in Cards



Responsibly using credit cards can be an important part of saving money and building credit.

Paying your credit card bill in full each month can help you avoid fees and interest.

Your credit history can impact your monthly expenses and your ability to qualify for financing, housing, and employment.

Responsible credit card use is important throughout your financial journey. Keeping a close eye on your accounts can help you avoid unnecessary fees or interest, which can help you save money now and set you up for more savings later.


In this article, we’ll discuss what it means to be responsible, what it means to build credit and how to do so.


What Does Responsible Mean?

With credit cards, responsible use generally comes down to how you use the card and whether you pay your bill on time.


One basic rule of thumb is to treat your card as if it’s a debit card. In other words, only make purchases if you already have the money in your bank account for the bill. It’s easiest to do this if you have a monthly budget and can predict your income and necessary expenses for the coming weeks and months.


That might not be realistic for everyone. For example, you may need to use a credit card for emergencies or necessities and then pay down the bill over time. Although interest can accrue, using your credit card may be the best option. You can still practice responsible use by making at least the minimum payment on time to avoid a late payment fee.


Another aspect of responsible use is knowing when and why your credit card charges fees.


For example, many credit cards charge a cash advance fee if you use your credit card to withdraw money from an ATM or at a bank. Additionally, they charge a higher annual percentage rate on cash advances than purchases. Credit cards may also have fees for foreign transactions or balance transfers.


Review your credit card’s terms and conditions to understand the potential fees and finance charges. Then, determine the best way to use your card to avoid the fees or consider getting a different card that has fewer fees.


The Benefits of Using a Credit Card Responsibly

Using your credit card responsibly can be important wherever you are in your financial journey. However, it may be especially important when you don’t have a lot of money to spare because responsible use can limit your overall expenses:

  • You may not pay as many fees. Many credit cards only charge fees if you use your card for certain types of transactions or miss your bill’s due date.
  • You may be able to avoid interest. Paying your bill in full each month allows you to avoid interest charges on your credit card purchase.
  • You can build a positive credit history. Paying your bills on time can help you build good credit and remain eligible for good interest rates in future.
  • You can save money on other bills. In many states, good credit can lead to lower auto, homeowners, and renters insurance premiums.
  • You can earn rewards. Rewards credit cards offer you cash back, points, or miles on your eligible purchases.


Developing good habits early on can be especially important for young people and those who are new to the U.S. and starting to build credit for the first time


Building Credit With Your Credit Card

A credit card can also be an important tool if you’re trying to build or rebuild your credit. . Fortunately, the same actions that limit your expenses can also help you build good credit. With credit scoring specifically, a few of the main factors to keep in mind are:

  • Aim to make your minimum payment by the due date. If you’re 30 or more days behind, the credit card issuer can report the late payment to the credit bureaus, which can hurt your credit score.
  • Try to only use a small portion of your limit. Your card’s balance relative to its credit limit is an important credit scoring factor, and having a low balance is best for your credit score. A general rule of thumb is to avoid using more than 30% of your balance. It may be easier to pay your bill in full each month if you never let your balance grow too high.
  • Be aware of applying for too many credit cards. You don’t need a lot of credit cards to build credit. Each time you submit a credit application, the resulting credit inquiry could hurt your scores a little. Having too many cards can also make it more difficult to track your bills’ due dates and different cards’ terms and conditions.


If you don’t already have a credit card, opening a new card could help you establish or build credit.


Traditionally, a big obstacle for newcomers to the U.S. was that it’s hard to get approved for a credit card when you don’t have an established credit history. Even an excellent history of on-time payments in another country has historically meant nothing to U.S. lenders. Now, a service from Nova Credit makes it possible to use your credit history from select countries to be considered for services, credit cards, and loans in the U.S.


The Takeaway

Responsible credit card use is always an important part of personal finance management. Understanding how to use your credit card responsibly and how you can build credit with your credit card is one great way to keep your finances on track.

Louis DeNicola

Louis DeNicola is freelance personal finance and credit writer who works with Fortune 500 financial services firms, FinTech startups, and nonprofits to teach people about money and credit.


All Credit Intel content is written by freelance authors and commissioned and paid for by American Express. 

Related Articles

How to Build Your Credit from Scratch - Credit Cards Can Help


So, you have no credit history? Find the best credit card to help build your credit by following these expert tips.


Tell me more

8 Ways Credit Cards Can Help You Rebuild Your Credit


Credit cards can help you build your credit, but can also lower your score if not used responsibly. Learn how you can rebuild your credit, starting today.


Tell me more

Types of Credit Cards: Understanding the Differences


Learn more about the different credit card types and categories out there, such as: travel, balance transfer, rewards, business, and more.


Tell me more

The material made available for you on this website, Credit Intel, is for informational purposes only and is not intended to provide legal, tax or financial advice. If you have questions, please consult your own professional legal, tax and financial advisors.