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Writer's pictureHeather PresleyCowen

Smart Credit Card Use: Building Credit without the Debt

Hey there, Club 720 community!

We’ve discussed different tools for building credit, like credit builder loans and establishing good banking relationships. Today, we're focusing on another key tool in your credit-building toolbox - credit cards. Specifically, we're talking about how to use credit cards wisely to build credit without accumulating debt.


1. Choose the Right Card

Before you apply for a card, take time to compare different credit cards and their features. Look for cards with low interest rates and minimal fees. If you're starting out, you might consider a secured credit card, which we covered in an earlier blog post.


2. Understand Your Limit

Your credit limit is the maximum amount you can spend on your credit card without facing penalties. But here's the key - just because you have a limit, doesn't mean you should use it all. Aim to keep your credit utilization below 30% of your total credit limit.


3. Pay Your Balance in Full Each Month

Aim to pay your balance in full each month to avoid interest charges. By doing so, you're essentially getting a short-term, interest-free loan each month.


4. Pay On Time

Your payment history is a major component of your credit score. To keep your score healthy, make sure you're paying your credit card bill on time each month. Setting up automatic payments can help with this.


5. Don't Apply for Too Many Cards

Each time you apply for a credit card, the lender does a hard inquiry into your credit, which can temporarily lower your credit score. Avoid applying for multiple cards in a short timeframe to maintain your credit score.


6. Use Your Card Regularly

Don't let your card gather dust. Regular, responsible use of your card shows lenders that you can handle credit.


Remember, credit cards are not an invitation to spend money you don't have. Rather, they're a tool to build your credit and a safety net for emergencies. Treat them with respect, and they'll reward you with a higher credit score.


Stay tuned for our next post where we’ll talk about how to handle a financial setback. Until then, keep striving, Club 720 crew!


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