What Is the Best Use of Credit Cards?

Read the Article
Uses of Credit Cards
Using a credit card can be intimidating, but there are ways to use credit cards to your benefit. Credit cards are an important part of building credit and they can help you make the most of big purchases by earning rewards and cash back, among other advantages.

Save more, spend smarter, and make your money go further

Using your credit card for the right purposes can help you maintain a good credit score and keep your credit utilization low. When you use your credit card for frivolous purchases, it’s easy to build up a large balance with higher minimum monthly payments. It’s especially important to try to avoid carrying a high balance on your first credit card because you don’t want to develop bad credit habits early.

While improper use of a credit card can land you in hot water, there are many benefits of using a credit card. Some credit cards offer rewards points or flight miles, while others have bonus offers to help you save money. If you use your credit card wisely, you can get a lot out of it.

In this article, we’ll discuss some of the best ways you can use your credit card, including to earn rewards points and build your credit. We’ll also cover some scenarios where you may want to avoid using your card to help you avoid skyrocketing debt. Read on to learn more about the best ways to use a credit card or use the links below.

How to Use a Credit Card

There are many things to learn when it comes to using a credit card, including when to avoid using it and how much of your credit is available for spending. All of your credit habits combine to determine your credit score, which is a figure that lenders use to determine your creditworthiness. If you have a high credit score, you can access larger loans and lower interest rates.

Monitoring your credit score is a big part of using your credit card right. You can get your credit score for free every 12 months. There are also several credit monitoring services that can help you keep an eye on your credit score in between annual credit reports.

How Much of My Credit Card Should I Use?

Credit utilization—or the percentage of your total credit in use—is an important metric to consider when it comes to your credit score. The percentage of credit you use affects two parts of your credit score: your credit utilization and your total available credit. 

As a general rule, many experts recommend keeping your credit card utilization at or below 30%. If you have a card with a $10,000 limit, you should use no more than $3,000 of it at a time.

While 30% credit utilization is the general recommendation, that doesn’t mean you should keep your cards right at 30%. This 30% utilization is considered the maximum amount of credit you should use, but using less than that is even better. While there’s nothing wrong with using a rewards credit card to earn points or cash back, it’s generally not ideal to carry a large balance on your credit card.

10 Best Uses of a Credit Card

You’ve probably heard people talking about avoiding the use of credit cards unless you can afford to make a purchase or you’re in an emergency situation. While it’s true that overusing your credit card can cause problems, you can consistently use your card if you’re using it for the right purchases.

In this section, we’ll discuss some of the best uses of credit cards if your goal is to have as close to perfect credit as possible and avoid mounting debt. The goal is to take advantage of your credit card offers, which is even easier to do if you have a card that offers rewards points or cash back.

To learn more, check out the 10 best credit card uses below.

  1. Building Credit

Your credit score is an important factor for building a secure financial future, and your credit card usage has a significant effect on your overall credit. In fact, credit cards are one of the easiest ways to build credit. 

Basically, there are certain metrics that credit reporting agencies use to determine your credit score. Some of these metrics include:

  • On-time payment history
  • Length of credit history
  • Total debt
  • Credit utilization
  • Total available credit
  • Types of loans
  • Number of new accounts
  • Recent inquiries

Credit reporting agencies use all of these metrics to give you a simple three-digit credit score, which lenders look at when you apply for a loan. If your credit score is low, that typically means you have a history of missing payments or maxing out credit cards. A high credit score indicates that you’re responsible with your credit cards and make monthly payments on time.

If you want to use a credit card to build your credit, make sure you’re using it regularly while being responsible with your purchases. Try making a few purchases monthly, keeping your credit utilization as low as possible, and paying off your entire balance each month.

There are also loans that can help you build your credit, but you may want to talk to a professional before taking out a loan.

  1. Leveraging Rewards 

As the number of credit card options has grown over time, banks have found interesting ways to offer customers rewards for using their credit cards. Different cards offer different rewards, so it may pay to shop around a bit and find a rewards card that fits your needs. In fact, the rewards earning rate was the leading factor in choosing a credit card for 12.6% of consumers.

There are many types of rewards you can get with these types of cards, including:

  • Airline miles
  • Hotel credits
  • Gift cards
  • Merchandise

One of the most enticing aspects of reward credit cards is that you often get points for several different types of purchases. You may get more points when you use your card for gas or food, which means you can use your card for monthly gas and food expenses to maximize your rewards.

Keep in mind that you shouldn’t use a credit card just to get rewards. However, it can be wise to use a rewards credit card to make purchases you were going to make with cash or a debit card anyway.

  1. Paying Down Debt

If you have debt with a handful of lenders, paying that debt down can be a good way to use your credit card. Not all debt is equal, and some debts have higher interest rates. If you prefer to only make one monthly payment, consider using your credit card to pay off debt. Combining several debts into one source of debt is known as “debt consolidation.”

You also have the option of a balance transfer card if you want to move your debt from one card to another. This may be a good option if you have debt on a high-interest card and want to take advantage of a lower interest rate. Balance transfer credit cards often have a 0% APR period in which you don’t accumulate interest on purchases.

Another thing to consider is that you may earn rewards for paying off debt with your credit card. These rewards are based on how much money you spend, so paying down debt can earn you many rewards points. If you’re planning on using cash to pay off debt, consider using your credit card and paying off your card right after.

  1. Traveling Abroad

When traveling to another country, it can be challenging to stay on top of a foreign currency or carry cash. With a credit card, you don’t have to worry about keeping up with different currencies or having cash on you at all times. Both Visa and Mastercard are accepted throughout the world, so there’s a good chance the store or restaurant you’re visiting will take your card.

Keep in mind that American Express and Discover aren’t quite as ubiquitous. While these cards may be accepted in other countries, they’re not as commonly accepted as Visa or Mastercard credit cards.

Moreover, consider using a travel credit card to book your arrangements abroad. Many credit issuers allow you to earn points on travel purchases, including hotel stays and flights. 

  1. Taking Advantage of Bonus Offers

Understanding how a credit card works means learning to use it to your advantage. In addition to rewards, many credit card providers offer special bonus offers if you use your credit card with certain merchants. You can usually look at these offers by opening the mobile app or logging into the website of your credit card provider.

Credit card bonus offers include discounts from popular retailers and restaurants. If you’re already planning on going out for dinner or making a purchase at your favorite store, you can use your credit card to save money and work on building your credit.

  1. Getting Cash Back on Certain Purchases

Cash back is one of the most popular credit card rewards these days, so using your credit card to earn cash back can be an excellent way to put some extra money in your pocket. Many credit cards offer 1% cash back on all purchases, but that’s just the tip of the iceberg. Some credit card issuers offer even more cash back rewards for gas, food, or purchases from certain retailers.

If you want some extra spending money, you can use your credit card for things like gas since you have to put gas in your car either way. So, getting cash back for it is a win-win. You can also use your cash back card on groceries, dining out, entertainment, and drugstore purchases.

  1. Financing Large Purchases So Payment Is More Manageable

Making a significant purchase can be overwhelming, even if it’s for something useful. Plus, you never know when you’ll need some extra cash in your pocket for an emergency.

You can use your credit card to finance large purchases instead, so you don’t have to pay for an item or service all at once. As an alternative, you can carry a balance on your credit card and make a few payments to bring your balance back to $0. This can be especially helpful if you need a new car or have to pay for expensive mechanic work that you can’t afford to pay for all at once.

  1. Renting a Car

Believe it or not, renting a car may be the most popular way to use a credit card. Whether you need a rental to get you by while your car is in the shop or a rental car you can drive while you’re on vacation, you can use your credit card to protect your finances.

The big benefit to using your credit card to rent a car is the fact that it can give you automatic insurance on your rental. If your auto insurance can’t pay for rental car theft or damage, your credit card offers additional insurance for rentals.

Keep in mind that not every credit card offers rental car insurance as a benefit, so make sure you check the terms and conditions of the card.

  1. Making Purchases Online

Making purchases online is another good use of a credit card. For starters, you can earn rewards points on the purchases you make with your credit card, which you can then use on future purchases.

Using your credit card for online purchases can also help protect your bank account. While a thief can make purchases with your credit card, they have no way of accessing your bank account and the money in it.

If you need to dispute a transaction, it’s typically easier with a credit card than with a debit card. Most credit card providers make it easy to report fraud or dispute a purchase and have it removed from your account.

In some cases, you may get access to certain protections when you shop online with a credit card. Price protection can offer you recourse if an item dropped in price after you purchased it, while extended warranty coverage provides a longer warranty. Consider these benefits when you’re deciding whether to use a credit card.

  1. Buying Gasoline

If you want to build your credit, maximize rewards, and maintain a low credit card balance, buying gas for your car can be a good place to start. All you have to do is use your credit card instead of your debit card when you fill up at the gas station. Once you have the means to do so, you can pay your balance down to $0 and start again.

Many credit card providers offer more rewards or cash back for gas purchases, so using your card for gas can be a smart idea. Just make sure you’re setting aside some money from each paycheck to pay off your credit card each month.

When You Might Want to Avoid Using a Credit Card

There are many times when it’s wise to use a credit card, especially if you’re already planning on making a purchase with cash or a debit card. That being said, your credit history is important, and you don’t want to use your credit card when it’s not beneficial. Here are some situations where it may be best to avoid using a credit card.

You Don’t Know What Your Current Balance Is

You should always keep a close eye on your credit card balance. If you don’t know what your current balance is, that’s a sign that you may be spending recklessly. Depending on whether you opted out of over-the-limit protection, your credit card provider may allow you to go over your credit limit. Of course, this also comes with a hefty fee.

You Can Barely Afford Your Current Minimum Payment

If you’ve been having trouble making your current minimum payment, don’t push that payment any higher. The more you carry on a credit card, the more expensive your monthly payment will be. Missing monthly credit card payments can lead to a lower credit score, making it harder to get a loan or credit card with a good interest rate. If you’re having trouble affording your minimum payment, pay down your card before making any purchases.

For a Large Purchase That Takes Up Most or All of Your Limit

We already talked about how important credit utilization is, so it’s generally not ideal to make a purchase that eats away most or all of your credit card limit. The higher balance you carry, the larger your minimum monthly payment will be and the more interest your account will accrue. If you let this situation progress for too long, you may end up needing credit card debt relief.

You Have a Tendency to Make Impulse Purchases

Everybody shops differently. While some people take time to make an informed decision, others tend to buy on impulse. If you’re an impulse shopper, you may want to avoid using your credit card. Impulse purchases can cause your credit card balance to shoot up quickly, making it tough to pay off.

When the Site Isn’t Secure

When you look to the left of a website URL in your address bar, you’ll see a small padlock symbol. Clicking on this will inform you about the security of the website. If a website isn’t secure, don’t give them your credit card information. Even if it’s not a deceitful website trying to steal your information, an unsecured website can allow third parties to steal your sensitive information.

Best Practices for the Use of Credit Cards

If you want to make the most out of your first credit card and build your credit over time, there are several things you can do to achieve that. Here are some of the best practices for using credit cards:

  1. Keep your credit utilization at a minimum
  2. Don’t make purchases you can’t afford
  3. Make your monthly payments on time and in full
  4. Understand how your interest is calculated
  5. Keep an eye on your credit card statement
  6. Look into credit card offers to find the best terms

There’s a lot more to consider when it comes to using a credit card properly, but these are some of the most important tips to remember. If you want to know more about using a credit card, you can always talk to your bank or watch a few educational videos online. The more effort you put into learning about personal finance, the easier it will be to get your finances in order.

Pros and Cons of Using a Credit Card

While credit cards are great for some people, they’re not ideal for others. Here are some of the pros and cons of using credit cards.


  • Building credit
  • Theft and fraud protection
  • Rewards
  • Paying for purchases over time


  • Overspending
  • Fraud
  • Interest and fees
  • Can affect your credit score

Is Using a Credit Card Right for You?

The fact is that credit cards can be a useful tool if you use them right. That being said, they’re not for everybody.

It’s important to look at your financial situation and goals when deciding whether to use a credit card. Using a credit card can be an excellent way to build credit, which can help you qualify for a home or auto loan later on. If that’s part of your plan, using your card to buy gas and pay small bills can allow you to build your credit.

Ultimately, it’s up to you whether to use a credit card or not. The use of a credit card is a personal decision that can have major financial implications, so it’s not something to take lightly. If you decide to use one, make sure you’re responsible and keep your credit utilization to a minimum to avoid credit card debt. Make sure to use the free Mint app to keep track of your credit card usage and monthly payments. This way, you can ensure you don’t overspend and accumulate debt.

Sources: Statista

Save more, spend smarter, and make your money go further


Written by Mint

Mint is passionate about helping you to achieve financial goals through education and with powerful tools, personalized insights, and much more. More from Mint