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5 Best Practices for Using a Credit Card

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Affinity Federal Credit Union Credit Card Best Practices Blog
By: Brian Savage
Business Banker

A credit card can be a useful tool in building up your credit and often used for accessing many everyday services – from booking vacations to renting a car. 

Credit cards can also lead to too much debt and cost you more money in the long run, if you don’t use them the right way. In the second part of this blog series on credit cards, I’ll cover some best practices for positive credit card use, and provide some tips and resources from Affinity.

As of 2020, total credit card debt in the United States nears $1 trillion1, and there has recently been a rise in overdue payments as consumers struggle to keep up with bills. These numbers reflect that while credit cards are helpful, often people use them in a way that magnifies the downsides – having to pay interest on unpaid balances – without maximizing the benefits – the ability to build up credit and financial reliability. If you’re an Affinity member, you have access to free credit counseling services, a membership benefit that helps Affinity members understand and review their credit reports. Members learn strategies to improve credit scores or work toward resolving derogatory marks. Making these adjustments can help a member become a stronger credit applicant in the future. Our complimentary credit counseling service also offers personal budget review and recommendations for shaving monthly expenses to increase a positive cash flow.

But while you may need expert, customized advice to address your own unique financial circumstances, there are some habits you can practice in your daily life. Here are five best practices for using a credit card:

1. Pay your balance to $0 each month, if possible. You can use your credit card every month to successfully build up credit. Carrying a balance month to month means you have to make an interest payment, causing you to pay more than what you originally spent. For this reason, each month, you should calculate how much you’ll be able to pay toward your credit card bill, and only charge that amount to your card. Now, of course there will be times when making the monthly payment in full will be difficult or impossible. If you’re going through a period of unemployment or general financial hardship, you may have to put more on your credit card than you can afford to pay back. If you are facing a period of time where you’ll be carrying a balance, think about getting a card with a low interest rate, such as Affinity Premium Visa card, rather than opting for a card that may offer cash back rewards but a higher interest rate. In these situations, your goal should be to pay off as much as possible and return to the point at which you no longer carry a balance.

2. Keep your credit utilization (percentage of outstanding credit balance to your credit limit) below 30%.  Credit utilization is a key component of your credit score. This may take some extra math, but you should keep tabs on your balance each month and strive to keep it below 30% of your credit limit. For example, if you have a $1,000 credit limit, you should try to keep your balance below $300. Using 30% or less of your credit limit is favorable to the credit bureaus. Consider this the sweet spot for maximizing rewards and credit-building while avoiding high utilization.

3. Review your statement each month for accuracy and spending awareness. Always review your monthly credit card statement (or check your balance online) for accuracy and to ensure you’re only paying for charges you made. Don’t hesitate to call your credit card provider to discuss unidentifiable transactions. Fraud continues to be a major problem, and if you don’t check your account or you’re used to having high balances, fraudulent purchases can be missed. Look out for monthly charges and expenses that were forgotten and are no longer needed. Subscriptions to streaming services, gym memberships, magazines, newspapers and websites are all common examples of these expenses.

4. Keep an eye out for promotional periods to capitalize on your rewards. Some credit cards have promotional periods in which you’re offered a 0% interest rate or enhanced rewards incentives during a specific period of time. This often happens when you first get a card but you may receive additional promotional offers in the future, as well. Make sure you’re aware of these promotions, as these are ideal times for including purchases you’d normally make another way. Taking advantage of a promotional period is a strategic way to capitalize on rewards or avoid making interest payments. But you should also be keenly aware of when the promo period ends so that you can have your entire balance paid off at that point. Otherwise, you may be looking at a hefty increase in interest paid over time.

5. Stay up-to-date on your credit score. A credit card can help you build a healthy credit score, so make sure you know where you stand. Affinity offers its members the option to receive a quarterly FICO score via online banking. You can also request your credit report from each of the three credit bureaus annually.

A credit card is a beneficial financial tool if used responsibly by incorporating these tips. Through this two-part series, I hope you’ve gained a better idea of what types of cards to look for and how to use them once you have them!


This information is for informational purposes only and is intended to provide general guidance and does not constitute legal, tax, or financial advice. Each person’s circumstances are different and may not apply to the specific information provided. You should seek the advice of a financial professional, tax consultant, and/or legal counsel to discuss your specific needs before making any financial or other commitments regarding the matters related to your condition are made. 

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