How To Use A Credit Card? [Everything You Should Know]

How To Use A Credit Card

A credit card allows users to take a short loan. It is a postpaid method in which you make purchases and repay the due amount later. While repaying, you may need or need not pay interest depending on whether you are paying on time or not. But how do you use a credit card properly to get the best benefits?

The best way to use a credit card is to spend a minimum during the initial time, keep track of expenditure, and pay back on time. Also, it is suggested using credit cards mostly for emergencies and looking after the regular expenditure. As it impacts the credit score, proper usage of credit cards is vital. 

You need to learn how to use a credit card wisely and tactfully to avoid negative consequences like debts, late fines, low credit scores, etc. So, let me brief you a bit about how to use a credit card properly:

3 Different Ways To Use A Credit Card:

If you are reading this article, I suppose you already have a credit card. You may have got one from a bank or a credit card company. But how exactly to make transactions using a credit card? 

You can do that in 3 different ways. These ways are:

Way-1: Credit cards are used just like you use a debit card. After you make a purchase in a store, you can swipe or insert the card in the designated machine, input the PIN, and transfer the money to the merchant’s account just like you do it with a debit card. 

Way-2: Another way of using a credit card is to make payments through various apps that are linked with your credit card. Digital wallet apps like Cash App, PayPal, etc. can be linked to your credit card. So, you can directly transfer an amount from your digital wallet to a merchant’s account. 

Way-3: If you prefer online shopping, you have to input your credit card details like credit card number, expiry date, CVV, etc. to a digital wallet app. From there you can make payments for your online purchases. Usually, the money gets transferred after you receive an OTP on your mobile phone via text message. 

5 Factors To Check To Use A Credit Card:

To use your credit card properly and utilize the benefits, you must check on some factors. Because credit cards can be useful as well as disadvantageous if you can’t maintain some criteria. To avoid negative consequences, you should monitor some factors regularly. 

The  5 factors that you must check on while using a credit card are:

1. Know Your Credit Limit:

The credit card company will provide you a credit limit that you can spend against. The credit limit is decided on various factors like your credit score, credit history, income, etc. This credit is stored on your credit card. You must not exceed the limit to avoid high interest and debts. 

As you use the credit card for purchases, your balance on the card reduces. Once you pay back the due amount, you get back the credit again. 

Know your credit limit and watch your expenditures accordingly. 

2. Pay Monthly Dues On Time:

There is no alternative to pay back the due amount each month on time. The primary condition to effectively use a credit card is to pay back the dues timely. 

If you fail to repay on time, you have to pay late fees and repay the amount with high interest. This is not financially viable for any credit card user as it would create a financial burden on you. This is why I mentioned keeping track of your expenditure according to the credit limit so that you don’t struggle to pay back the dues. 

The long-term demerit of not paying the dues on time is it would reduce your credit score as the credit utilization ratio would be high. A low credit score would affect your credit history and records. 

3. Know The APR of Your Credit Card:

Credit cards always come with interest. The interest rate varies from company to company. So, don’t get excited to see 0% APR that is only offered during the grace period (for the first 12-21 months). 

Moreover, if you can’t pay the dues on time, you have to pay extra interest. So, make sure to learn about the interest policy before getting and using your credit card. Know if the interest rate is affordable to you or not. Otherwise, you would end up paying debts and having a low credit score. 

4. Know About The Credit Card Fees:

A lot of fees come along with credit cards. Not only you must learn about APR, but you should know about the other fees that you may need to pay. 

The first fee that comes with a credit card is the annual fee. Some cards don’t charge any annual fee, while some may charge annual fees. Besides, you need to pay extra fees when you make foreign transactions. 

While transferring balances from your credit card via digital wallets or other modes, you need to pay a fee. The charge varies from company to company. 

If you take a cash advance or withdraw cash from your credit card, you have to pay fees according to the amount you pay. 

The fee that you should avoid consciously is the late fees and extra interest that you need to pay if you can’t pay the due amount on time. 

5. Know Your Credit Card Balance:

Check how much balance you have on your card. It is important to know this to calculate the credit utilization ratio. The utilization ratio is the amount spent divided by the amount available. It is suggested to keep the credit utilization ratio low which improves your credit score. 

Besides, checking the balance helps you to know how much you should spend. The other balance data like the due amount, credit limit, etc. are sent to you after the end of the month by your credit card company. 


A credit card is that magic stick that is wonderful to use but can be detrimental if you don’t know how to say the spell. So, you must know how to use your credit card wisely and properly to enjoy the best benefits. 

Are you ready to use your credit card in the best possible way? 

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