Credit Card Dos and Don'ts

woman on laptop with credit card


April, 2021

Leisl Cording byline


Establishing and maintaining good credit is one of the most important aspects of personal finance. Not only will a good credit score allow you to borrow for the larger ticket items when you need to – say, to purchase a home or a car – but it is increasingly used as a measure of your overall trustworthiness and reliability. Even some employers are running credit checks on prospective employees. That’s why it’s so important to build and maintain good credit, and using credit cards wisely is an essential piece of that puzzle.

Whether you’re just beginning to teach your teen the fundamentals of credit or you could use a few pointers yourself, the following credit card dos and don’ts are an excellent guide for how to use credit wisely so that you can build and maintain the healthy credit score you need to live well.

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First, the basics: how credit cards work.

A credit card is a card issued by a financial company that gives the holder an option to borrow funds, usually at the point of purchase. Credit cards charge interest and are used primarily for short-term financing. Interest typically begins to be charged one month after a purchase is made, and borrowing limits are preset according to an individual’s credit rating.

To seek out new customers, credit card companies often send young adults and other prospects credit card applications in the mail. Typically, these mailings are unsolicited—you may have received a few yourself. But, before you sign on the dotted line and return that application, you should know a bit more about the dos and don’ts of credit cards.

Credit Card Dos:

  • Shop around. The credit card industry is very competitive, so compare interest rates, credit limits, grace periods, annual fees, terms, and conditions. NerdWallet is a good place to start to compare different cards.
  • Read the fine print. The application is a contract, so read it thoroughly before you sign it. Watch for terms such as introductory rate, and be sure you know when that introductory interest rate expires.
  • Pay your bill in full each month. Pay off your statement each month in full and on time; otherwise, you will begin paying interest charges and may be charged late fees. Paying off your bill each month can also help ensure that you stay out of debt.
  • Track your spending. Look closely at your credit card statements each month to be sure that you actually approved the charges that appear. Mistakes and fraud can happen, and you don’t want to pay more than you agreed to.
  • Pay attention to changes in your credit agreement. Occasionally, the credit card company will send you updates on the contract you have with it. If you don’t pay attention, you could miss something important.


Credit Card Don’ts

  • Don’t spend money you don’t have. Buying things without sufficient funds in your bank account can lead you down a dangerous path. Before you know it, you could be in a lot of debt with no way to pay it off.
  • Don't get too close to your maximum credit limit. Creditors want to see that you know how to use your card wisely. Keeping your balance low and making payments in full are good ways to do that. Just because the option to spend more is there doesn’t mean you should take advantage of it.
  • Don’t sign up for store credit cards just to receive a discount. Opening a credit line at a store to obtain a discount on a purchase then and there may not be a good idea. Remember that credit cards affect your credit score and that opening too many can actually hurt it. Plus, store credit cards tend to have much higher interest rates than those offered by financial institutions.
  • Don’t apply for additional credit cards if you have balances on others. Pay your balances on existing cards before opening new accounts. Getting in this habit will make you less likely to open too many accounts.
  • Don’t give your credit card to someone else. Whether you authorize it or not, giving your credit card to someone else to use is against the law.


Although credit cards are important in helping establish a credit history, they are often misused. A credit card can be a powerful tool in the hands of a responsible individual, but it can be destructive if used by someone who is unaware of its pitfalls. Keep these tips in mind before obtaining and using a credit card.


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Presented by Vice President, Associate Financial Advisor Leisl L. Cording, CFP®. Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your representative. Weiss, Hale & Zahansky Strategic Wealth Advisors does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice. 697 Pomfret Street, Pomfret Center, CT 06259, 860-928-2341.


© 2021 Commonwealth Financial Network®

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