The #1 rule of credit cards is to pay your bills on time and in full each month. By making timely and complete payments, you can avoid late fees, interest charges and credit score damage, which will help you maintain control over your finances as well as prevent the accumulation of excessive debt.
Keep in mind that the most important part of this rule is to pay on time, as failing to do so will lead to credit score damage. Although paying in full is extremely beneficial, it might not always be possible. If you can’t pay in full, you should pay as much as you possibly can above the required minimum payment.
Important Rules for Credit Cards
- Always pay on time.
- Pay your balance in full each month, if possible. If not, pay as much above the minimum required payment as you can.
- Try to keep your credit utilization below 30% of your card’s credit limit. This will help you increase your credit score.
- Spend within your means, and do not charge luxury purchases you can’t afford.
- When looking for a new card, focus on rewards if you plan to pay in full each month. If not, focus on getting a low interest rate.
- Only get a card with an annual fee if the rewards you would earn in a typical year more than cover the cost (or there are no cheaper options).
- Before applying for a new card, check your credit score to make sure you meet the card’s requirements. Get pre-approved if possible.
- Don’t take out cash advances unless it’s an emergency. They come with expensive fees, and interest starts accruing right away.
- Check your statements every month to make sure there are no unauthorized purchases.
- Get a credit card as soon as possible to begin building credit history and saving money.
Now that you know some of the most important things to do when you have a credit card, you can learn about the biggest credit card mistakes to avoid, as well as browse the best credit cards to get, on WalletHub.
This answer was first published on 05/26/23. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.
FAQs
Always Make Payments on Time
What is the #1 rule of credit cards? ›
Pay your balance every month
Credit card balances should be paid on or before the due date. Paying the balance in full has great benefits. If you wait to pay the balance or only make the minimum payment it accrues interest. If you let this continue it can potentially get out of hand and lead to debt.
What is the golden rule of credit cards? ›
Paying your bill in full, on time, every month ensures that you will never pay interest on your purchases. A great way to make sure you never miss a payment is to set up automatic payments from your checking account.
What's the first rule of using your credit card the right way? ›
1. Pay off your balance every month. Avoid paying interest on your credit card purchases by paying the full balance each billing cycle. Resist the temptation to spend more than you can pay for any given month, and you'll enjoy the benefits of using a credit card without interest charges.
What is the 1 30 rule for credit cards? ›
What is the Chase 1/30 rule? The 1/30 rule is short for "1 card every 30 days," meaning your chances of being approved for a Chase business card are slim to none if you've applied for any card in the last 30 days.
What is the 50 30 20 rule for credit cards? ›
The idea is to divide your income into three categories, spending 50% on needs, 30% on wants, and 20% on savings. Learn more about the 50/30/20 budget rule and if it's right for you.
What is the credit card rule? ›
In the points and miles world, a mention of the infamous 5/24 rule is sure to follow whenever a Chase card comes up. In short, this refers to the unofficial rule that Chase won't approve a credit card application for someone who has opened five or more new credit cards from any issuer in the past 24 months.
What is the golden rule of credit? ›
Before we analyse further, we should know the three renowned brilliant principles of bookkeeping: Firstly: Debit what comes in and credit what goes out. Secondly: Debit all expenses and credit all incomes and gains. Thirdly: Debit the Receiver, Credit the giver.
What is the rule of 78 on a credit card? ›
The Rule of 78 formula
The lender allocates a fraction of the interest for each month in reverse order. For example, you would pay 12/78 of the interest in the first month of the loan, 11/78 of the interest in the second month and so on. The result is that you pay more interest than you should.
What is the biggest mistake you can make when using a credit card? ›
Not paying on time
But it's best to always pay at least part of your credit card bill on time. Missing or late credit card payments can have a big impact on your credit score and fees.
It's a good idea to pay off your credit card balance in full whenever you're able. Carrying a monthly credit card balance can cost you in interest and increase your credit utilization rate, which is one factor used to calculate your credit scores.
Does it hurt to open a credit card and not use it? ›
You may be wondering if it hurts your credit score to not use a credit card. Generally speaking, it does not. In fact, the opposite may be true. Keeping an unused credit card open can help keep your credit score higher.
What is the golden rule of credit card use? ›
Pay all your bills on time
Not only does paying bills early help you build your credit score, but it helps you avoid late fees and penalty interest rates. If you can, we recommend paying your bill in full each month too, so you won't carry a balance and accrue interest.
What habit lowers your credit score? ›
Late or missed payments can cause your credit score to decline. The impact can vary depending on your credit score — the higher your score, the more likely you are to see a steep drop.
What is the number one rule of using credit cards? ›
The best way to use a credit card is to avoid paying interest by paying off the balance every month on time. Interest rates, known with credit cards as annual percentage rates, apply to purchases, cash advances and balance transfers for most credit cards.
What is the 5 24 rule for credit cards? ›
The 5/24 rule states that if you have been approved for five or more credit cards in the last 24 months, you will automatically be denied for any Chase credit card products. This is to prevent consumers from applying to credit cards solely for the welcome bonus and closing the account before the annual fee comes due.
What is the 2 90 rule for credit cards? ›
2-in-90 rule: You can only be approved for up to two American Express cards within a 90 day period.
