If you haven’t already, check out this blog post to learn how you can open a credit card even though you have no credit. 

Now that that’s settled, let’s get started!

Did you recently open a credit card, but don’t know the first thing about how to use it? Or, are you thinking of opening one, but want some advice?

I gotchu.

I remembered how excited I was when I opened my first credit card. Lucky for me, (and you!) we live in the digital age where information is available at our fingertips—and that’s what I did. 

I turned to Google when I had no one else. 

And YouTube. 

But I digress.

It’s been three years since I opened my first credit card and I must say I’m quite impressed with what I’ve achieved. Over the three years, I was able to increase my credit limit from the hundreds to over $8,000 and I achieved my highest credit score of 758.

I want to help you achieve the same results, which is why here are the top eight pieces of advice I have for first time credit card users. 

If you recently opened a credit card for the first time or is thinking of opening a credit card soon, then you’re considered a first time credit card user.

Read these eight steps to learn how you can achieve a credit rating of 750+.

By the way, if you’re shopping around for credit card options, make sure to check out my resource library.

Six Tips to Increase Your Credit Score

Tip #1: Never Spend More Than 30% of Your Credit Limit

As a first time credit card user, this just means that if your credit card limit is $1,000 (this is how much you can charge on your credit card), you should never charge more than $300 on your credit card. 

This is known as credit card utilization.

Always, always try to spend 30% or less and never charge more than 30% of your credit card limit.

Let’s say you have a 690 credit score, but you made a $400 purchase, which accounts for 40% of your credit limit. You even made sure to pay it off. 

But, guess what? Your credit score will still go down nonetheless because you spent more than 30% of your credit card—and you’re probably looking at a 650 or 640 credit score now. 

What’s a credit score? You can learn more about that here, but essentially, a credit score is like a rating chart that companies use to evaluate whether you’re a responsible person that they can trust to pay back their money if they lend you money. This brings me to my next point.

If you’re looking for credit card options, check out my resource library.

Tip #2: Only Charge What You Can Pay

When you go to the store and see a $100 purchase, before you make that impulse buy, take a step back and think, “Do I have enough in my bank account to pay this off?” 

If the answer is yes, then by all means go ahead and make that purchase. 

But if the answer is no, do not make the purchase. If you don’t have this money in the bank, don’t charge it on your card!

The #1 thing you want to avoid as a first time credit card user is to avoid credit card debt. Instead, you want to focus on building your credit score

Tip #3: Pay off Your Balance in Full Every Month

In the three years that I’ve had my credit cards, I never once miss a payment and I always, always make sure to pay off my balance in full each month. 

What is a balance? 

A balance is how much you owe the credit card company. In other words, how much you’ve charged on your credit card. 

To figure out how much you owe, log in to your credit card company and check your summary (usually the first page you get to when you log into your bank account.

If you really can’t pay off the balance in full, the next best thing to do is to pay more than the minimum payment.

A minimum payment is how much you must at least pay back each month. For example, my balance may be $400 this month, but my minimum payment is $50. 

That means I need to pay at least $50 this month, but I recommend you pay more than the minimum payment.

Why?

Because the longer you leave the balance unpaid, the more interest you have to pay back over time. If you keep holding off on paying that balance, you end up paying more in interest over the long run. Read this article to learn more about what happens if you only pay the minimum balance.

Tip #4: Do Not Use Your Credit Card For Impulse Purchases

I think one of the reasons why so many people fall into the credit card trap is because it’s so convenient to use your credit card. 

Do you know what instant gratification is?

Instant gratification is the pleasure and/or happiness you feel when you receive something right away. Rather than wait for something to happen, you’d rather reap the rewards right now.

Credit cards give us more points of entry that leads to instant gratification

That cute tank top that costs $75? Rather than wait for it to be on sale, you want it right now.

Strapped for cash? No worries. With a single swipe, that tank top could be yours.

Hanging out with friends at the bar but you have no more cash on you? No worries. Just charge it on your credit card.

You will worry about the bill tomorrow.

The convenience of a credit card is that you can use it to pay for almost anything, and what’s more, you don’t even see the money leaving your bank account so you’re more than likely to not care if you have money in the bank.

Credit cards can be our worst enemy if we don’t have self-control. But it can be our best friend if we know how to use it wisely.

Here’s a trick I use to restrain myself. If I want something, I take a picture of it (so I don’t forget) and leave it on my phone. I wait for a week to go by. Do I still want it? If yes, I will allow myself to make the purchase. If the answer is no, then thank god, I just saved myself some money!

If you’re looking for a way to earn free money, check out Zogo, which I go more in-depth in my resource library.

Tip #5: Start Small

As a first time credit card user, if you’re not really sure what you’re doing, start out small.

Use the credit card to make small purchases that you know you can pay off.

For example, next time you go to the grocery store, use your credit card to pay for a can of ice cream. 

Or use it solely to pay for gas for the next three months. 

Not only will this be a good way for you to learn how to use your credit card, but you will also learn the basics of how to read your statement, how to pay off your balance each month, see how this impacts your credit score, and so much more!

If your credit card offers cashback, like the Discover It Cash Back Rewards card here, make sure to take advantage of it! 

By the way, I do get a small commission from Discover if you sign up and get approved. This in no way harms you or anything. 

Most credit cards have certain categories that they offer cashback on. 

For example, with the Discover It Cash Back Rewards card, you get 5% cash back on select months of the year in certain categories, and then you get 1% cash back on every other purchase you make. Read more about the benefits of the Discover It Cash Back Rewards card here!

You build credit by paying off your balance in full, on time each month. You don’t want to be in a situation where you’re dragging balance from month to month.

Start small and pay it off every month.

Bonus Tip #6

As I said above, you never want to charge more than 30% on your credit card, but what if you made the purchase anyway?

Here’s a little trick that I’ve used to help me keep my credit card utilization in check.

As long as you make a payment on that purchase before it appears on your credit card statement, it will not affect your credit card score.

A credit card statement is essentially a piece of paper that tells you what purchases you made each month, how much the purchase was, and what your credit card balance is.

I know, this can be super confusing. How can you charge 30% but not have it show up in your bank statement? 

Take this scenario for example: 

1. On the third day of every month, I receive my credit card statement.
2. I have a $1,000 credit limit on my credit card.
3. On March 10th, I bought a couch for $500.
4. On March 15th, the purchase appears on my credit card: $500.
5. five days later, on March 20th I schedule a $300 payment.
6. On March 20th, the payment cleared, and my total balance is now $200.
7. For the rest of the month, I don’t make any more purchases.
8. On April 3rd, I receive my credit card statement with a balance of $200.
9. I pay off the balance on April 6th. My credit score went up an additional two points.

Did you get it?

The trick is to make a payment five to 10 days in advance of you receiving your credit card statement because by doing so, you’re able to bring down that balance to a point where it’s below 30% utilization. Read more about this scenario in this article.

What do you think? These tips will definitely help you build your credit as a first time credit card user if you follow them to a T. You don’t have to follow all steps, just a few will be fine.

I’d love to know what other tips you may have, so comment down below!