Credit Cards 201

How to use plastic strategically to support a healthy financial outlook.

Using credit cards effectively

Credit cards aren’t all bad. In fact, when used correctly they can be a vital part of a stable and productive financial outlook. The only trick is to make sure you use credit to your best advantage and avoid abusing it in a way that puts your financial health at risk. Otherwise, you risk credit card debt taking up too much income in your budget and winding up in financial distress.

With that in mind, the resources in this section are intended to help you learn to use credit cards in the most strategic and effective way possible so you can promote financial stability and work to achieve your goals. It’s important to note that this information is only for consumers who are not currently struggling with debt. If you are struggling, then you need to take steps to get your debt under control before you can build an effective credit card strategy. Call us at to speak with a certified credit counselor or complete our online application to request help now.

Using credit cards strategically

If you want credit to be a key element in your financial outlook that helps instead of hurts, you have to use your credit cards in a way that promotes financial stability. You also shouldn’t use credit when you know it’s not going to be positive for your financial outlook.

So for example, if you pull out the plastic to buy a couple of items at the mall because you’ve already spent your clothing budget for the month, then that’s not a strategic use of credit. On the other hand, if you choose to put budgeted clothing purchases on a credit card because you’ll earn 5 percent cash back and then pay off the debt within the first billing cycle because the money was already allocated in your budget, then that’s smart.

With that in mind, you should really ask yourself two questions before you use a credit card:

  1. What benefit or advantage are you getting from putting the purchase on credit instead of paying for it in cash?
  2. How much more is that purchase going to cost with interest added before you finally pay it off?

These two questions can help you make the decision of whether it’s worth it to use your cards in the first place, as well as help you plan what to do with the debt once it’s incurred. Ideally, your credit purchases should give you an advantage without costing you in the long run.

So what are some potential advantages you can gain from using a credit card?

  • Earning rewards, such as cash back or travel miles
  • The ability to spread out the cost of a major purchase over time
  • The convenience of buying online instead of going to the store
  • Budget organization – i.e. you always use X credit card for gas purchases

Of course, you also want to avoid things that tend to get consumers in trouble with credit:

  • Putting purchases on plastic because you have a cash shortfall in your budget.
  • Using credit because you’re spending more than you should in a store.
  • Using credit to pay bills or juggle your debts because you can’t afford all of your payments in a given month.
  • Spending on credit when you know you won’t be able to pay off the debt quickly before a lot of interest builds up.

Key questions for strategic credit card use

By using the above information to build your credit usage strategy, you can begin to use your cards in a strategic way that supports your financial stability instead of putting it at risk. Still, you may have some questions about how to use credit to your best advantage.

The following questions are four key topics you need to know if you really want to achieve mastery over your credit cards and the debt they generate:

  • How do I choose the right credit cards for me?
    In this section, we help you select your credit cards strategically so you can have accounts that help you achieve your financial goals and avoid problems with debt.
  • How many credit cards do I need?
    You may not know it, but having a low number of credit cards can actually make it harder to achieve the credit score you want. Learn how many accounts you need to have open in order to maximize your credit score.
  • How do I balance rewards earned against interest added?
    Cash back and travel miles are great, but if you’re only making minimum payments on your credit cards, chances are good those rewards are really a waste. We explain how to balance rewards with added interest charges.
  • How much credit card debt is too much?
    Having no credit card debt is ideal for financial stability, but if you really want to maximize your credit score, you shouldn’t actually maintain zero balances on all of your accounts. We help you find the sweet spot when it comes to credit card debt.