Daniel Cook

Credit cards can be an excellent financial tool to help you build good credit history, receive rewards for common purchases, and provide quick, low-interest financial assistance in an emergency situation. However, not every credit card is created equal. And, like every powerful tool, a credit card has just as much potential to hurt as it does to help.

By knowing which credit card is right for you and ensuring you use your credit card in a safe and responsible way, you can maximize the benefits of this powerful financial tool while minimizing your risk.

If you’d like to know more about how to choose the right credit card for you, avoid common credit card mistakes, and build or repair your credit rating, read on.


If this is your first credit card, there a few things to know before starting the application process that will help you make the best choice for you.

When you apply for a credit card, the lender will want to know what kind of credit history you have to determine if you are eligible for the type of card you are applying for. When the lender performs this type of credit check, your credit score will temporarily decrease by a few points. If you apply for multiple credit cards simultaneously, your credit score could drop significantly, thereby disqualifying you for the credit cards you just applied for. To avoid applying for more credit cards than necessary, you should first obtain your credit score and then apply for credit cards which are offered to individuals with similar credit scores.

2. How to choose the best credit card

Before you choose a credit card company, be sure that you compare interest rates. There is no standard when it comes to interest rates, even when it is based on your credit. Every company uses a different formula to figure what interest rate to charge.

Compare rewards programs before you choose a credit card company. If you plan to use your credit card for a large percentage of your purchases, a rewards program can save you a great deal of money or provide some great perks, like flights, meals, hotels, cash back etc..

There are a number of reward programs offered by Credit Card companies. Be sure to research which one would best suit your lifestyle and spending habits.

3. How to manage your credit card

If you have any credit cards that you have not used in the past six months, then it would probably be a good idea to close out those accounts.

If you can't pay your credit card balance in full each month, be sure to make at least double the minimum payment until it is paid off. It’s imperative that you keep a $0 balance on your Credit Card at the end of every month. This will drastically reduce your interest fees.

If you do end up carrying a large balance on your Credit Card, you may be able to transfer that debt to another card with a lower interest rate.

Keep one low-limit card in your wallet for emergency expenses only. All other cards should be kept at home, to avoid impulse buys that you can't really afford.

Just because an item is within your credit card limit, does not mean you can afford it. Make sure anything you buy with your card can be paid off by the end of the month.

4. How to manage or keep credit card debt healthy

If you travel internationally a lot and you will be using your credit card frequently, go with a company that does not charge a foreign transaction fee. Pre paid cards could be a great option for this as well. Many companies offer a travel/prepaid card to help avoid any unnecessary or unforeseen fees.

It is important not to run up credit card bills that are so large that it is impossible for you to pay them back. The key to this is keeping a low limit on your card. Credit Card companies will always try and up sell your available credit limit. Always keep it at a minimum.

Read, memorize and then, understand the terms and conditions of each and every credit card you have. Know what the interest rate is, how and when it is applied. There could be other hidden fees, like an annual membership cost. Be sure to fully understand these to avoid any unforeseen charges and interest fees.

If you are unable to make at least the minimum payment on your credit card bill, quit using the credit card right away and contact the credit card company.

It may seem unnecessary to many people, but be sure to save receipts for the purchases that you make on your credit card. Take the time each month to be sure that the receipts match up to your credit card statement.


1. https://www.investopedia.com/articles/pf/10/credit-card-debit-card.asp
2. https://www.nerdwallet.com/blog/finance/multiple-credit-card-applications-hurt-credit-score/ 

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