Credit Cards – How to Use Them Responsibly

Credit cards give consumers the flexibility to spend now and repay later. When used responsibly, they can be more useful than debit cards or cash.

When choosing a card, look for one that shows the logo of a major network. These are the ones that stores accept. Also, consider cards with special benefits, like price protection.


Credit cards can be an invaluable financial tool if used wisely. They can help you build credit, earn rewards, finance a big purchase and consolidate debt. But they can also be dangerous if you overspend or don’t pay off the balance every month.

Credit card issuers report your monthly account activity to credit bureaus, and a history of responsible use can help you get approved for loans in the future. They can also boost your credit score when you pay off your balance in full each month and keep your credit utilization ratio low.

Many credit cards come with perks, such as a one-time welcome bonus and cash back on purchases. Compare these benefits against the cost of any annual fee to find the right card for you. They can also offer additional consumer protections that you may not find with a debit card, such as purchase protection and extended warranties. And some credit cards offer fraud liability protection, which protects you if your card is lost or stolen.


While credit cards offer many benefits, they can also be a burden if used irresponsibly. Especially when it comes to paying your monthly bill, the interest charges and fees can add up quickly and spiral you into debt.

Credit card EMIs are usually cheaper than a personal loan, but you should always know how much you’re paying. Every purchase is recorded on your statement, making it easy to track your spending habits.

Using credit cards gives you instant access to credit that you can pay back later, but this can easily become a habit and lead to overspending. In addition, credit cards often come with hidden costs like late payment fees, annual fees, balance transfer fees, cash advance fees and more. All these charges can significantly increase the amount of money you owe and hurt your credit score. Moreover, your card details could fall into the wrong hands, leading to unauthorized transactions. This is why you should only use credit cards if you’re able to pay off your debt each month.


Credit card companies charge fees for things such as late payments, balance transfers and cash advances. These fees, along with interest charges, can add up quickly.

Some cards require a yearly fee. If this is a concern for you, look for a card that does not charge an annual fee or has a waiver for the first year.

Interchange fees make up the lion’s share of credit card processing fees, Opens overlay. These fees are paid by merchants and flow through credit card networks to the card’s issuing bank.

Some “purchases” made with a credit card that are actually cash transactions are considered cash advance purchases under the card network’s guidelines, which results in a higher interest rate and lack of grace period. Examples include money orders, prepaid debit cards and lottery tickets. The 3% or so that is charged for these kinds of transactions may be enough to offset the benefit of rewards on certain purchases.


Interest rates are one of the biggest sources of frustration for credit card holders. They can be far higher than those on other types of debt, especially when you don’t pay off the balance by the end of the month.

Credit card rates are usually based on prevailing interest rates, such as the prime rate, but can also be influenced by the user’s creditworthiness and the card issuer’s risk evaluation. In addition, different rates may apply to purchases, cash advances and balance transfers, or they could be tied to a promotional period that ends.

The best way to avoid interest charges is to pay off the full statement balance by the due date. That way, you’ll only have to repay the amount that you actually spend. However, this is not always feasible, which means you should separate credit cards for everyday spending from those for major purchases. Otherwise, those daily charges will start to accrue interest right away.