Master Your Credit

How to Manage Your Credit Cards

Woman using credit card


Carlina Teteris / Getty Images

Credit cards can be a great tool for building credit because they can help you establish a positive payment history with credit bureaus. But when you aren’t careful about how you use them, credit cards can be your financial downfall. 

Missing payments and accumulating credit card debt can negatively impact your credit and get you caught in a debt trap that’s hard to recover from. Below are four ways to manage credit cards so they can help instead of hurt you.

Key Takeaways

  • Credit cards can provide valuable rewards and perks, but not using them carefully could do more harm than good. 
  • Comparing rates, terms, and fees can help you find the credit card that will benefit you the most and cost you the least. 
  • Keep your payments current and your credit utilization low.
  • Regularly check your credit card statements and your credit reports. Correct errors and fraudulent charges.

Choose Your Credit Cards Carefully

Managing credit cards wisely starts with choosing the best credit card for your circumstances. Credit cards come with a variety of terms, fees, and rewards that you’ll want to review before applying. Keep in mind that applying for multiple credit cards back to back can hurt your credit score, so it’s important to be selective.

Interest Rates

An interest rate is what your credit card issuer charges you if you don’t pay off your balance each month. Credit card interest rates are expressed as an annual percentage rate (APR), and the rate can vary depending on the card.


The average credit card APR was 20.28% in April 2021, according to The Balance’s interest-rate tracking.

If you have a thin credit file or less than stellar credit, you might only qualify for a high interest rate—and that’s okay. After establishing better credit through on-time payments, you may be able to request an interest rate reduction or qualify for a new card with a better rate.


Credit cards may have annual fees, as well as other fees for balance transfers, transactions made in other countries, cash advances, and more. Depending on how you plan to use the card, some fees will matter more than others. If you plan to travel, no fees for use abroad could be a top priority, while that may be less important if you’ll only use your card stateside.

Rewards Opportunities 

Many cards offer rewards, such as points, miles, or cash back. If you consider a rewards card with an annual fee, make sure that the rewards justify the fee. Otherwise, you could pay more than what the card is worth.

Keep up With Payments

After choosing a card, on-time payments are crucial. Payments more than 30 days late can hurt your credit score and stay on your credit report for up to seven years.

While you may have the option to make minimum payments, doing so each month could hurt you in the long run because of compounding interest. For example, if you make only minimum payments, it could take more than 18 years to pay off a $5,000 balance with an APR of 20%.

Watch Your Credit Utilization Ratio

Your credit utilization ratio is the percentage of your available credit limits that you’re using. It’s one of the most important factors that affect your credit score. Ideally, you want to keep your credit utilization at or below 30% by paying off as much of your balance as you can each month.


To calculate your credit utilization ratio, add up the balances on your cards and then add up your credit limits. Divide your total credit card balances by the total credit limits and multiply by 100. For example, if you have a card with a $5,000 credit limit and the balance is $2,500, your credit utilization is 50%.

Review Credit Card Statements and Credit Reports

The final step for managing credit cards is monitoring your credit card statements and credit reports so you can quickly identify errors and report fraud. You can get free credit reports from each credit bureau at

Tips for Managing Credit Card Debt

If you have a few credit cards in your wallet and are trying to pay off debt, here are a few tips that can make paying off debt a bit easier.

Change Your Due Date 

If your payment due date is at a time when you’re responsible for paying many other bills, you could change the due date. Some credit card issuers, like Chase, let you choose when to make your monthly payment.

Choose a Repayment Method

The debt snowball and debt avalanche methods are two popular credit card debt repayment strategies.

The debt snowball is when you pay the minimum on each of your balances and devote extra money to paying off debt from smallest to highest balance. Alternately, the debt avalanche is when you pay the minimum on all cards and focus extra funds on debt with the highest interest rate.

Which strategy to go with depends on what motivates you. If you’re motivated by escaping high interest rates, the debt avalanche could be the way to go. If you’re motivated by crossing debt off your list, the debt snowball could be the better option. 

Consider a Debt Consolidation Loan

A debt consolidation loan is an installment loan used to pay off multiple balances at once. A consolidation essentially moves your credit card debt under a new loan with a set repayment term and an interest rate that, ideally, is less than what you’re currently paying. This can save you money and make debt repayment easier since you only have to worry about one payment.


If you decide to consolidate debt with a loan, it’s important to avoid racking up new debt on your old credit cards. Otherwise, you could find yourself managing new credit card balances while paying off your consolidated debt.

Hire an Expert If You Need Help

If you’re struggling to pay off debt on your own, you could consider working with a debt counselor at a nonprofit debt counseling organization. Counselors may be able to develop a budget and debt repayment plan for you that helps you pay off debt faster.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Experian. "Can One 30-Day Late Payment Hurt Your Credit?"

  2. Consumer Financial Protection Bureau. "Credit Score Myths That Might be Holding You Back From Improving Your Credit."

  3. Chase. "Frequently Asked Questions," Expand "Can I Change My Payment Due Date?"

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