6 Tips to Get the Most out of Your Credit Cards

1. Pay Off Your Entire Balance Each Month

It's best to use your credit card only to make purchases you can afford to pay off before they begin accruing interest. Prioritize paying off your balance before the end of each billing cycle's grace period and be sure your credit card purchases fit into your monthly budget. If you make only the minimum payment each month, you could pay a lot in interest over time—money you could otherwise be saving or investing.

Consider setting up a calendar reminder on your phone to pay off your credit card balance each month or pay period. You could also pay off credit card purchases as you make them. This takes more effort than making larger, regular payments, but it's a helpful way to stick to your budget while also benefiting from using your card.

2. Keep Your Credit Utilization Low

Credit utilization, or the amount of available credit you're using relative to your credit limit, is one of the important factors in your credit scores. Maxing out or carrying a high balance on a credit card makes you look riskier to lenders and can do serious damage to your credit scores.

Your credit utilization rate is calculated by dividing your outstanding credit card balance by your total available credit. For example, if you have a credit limit of $2,000 and a balance of $500, your credit utilization is 25%. Credit scoring models factor in your credit utilization for each credit card and across all your cards.

It's important to keep your credit card utilization below 30%, but the lower, the better. If you can't pay off your balance each month, making payments earlier in month before your billing cycle ends (and the credit card company reports your balance to the credit bureaus) can help you improve your credit scores and save money on interest.

3. Avoid Late Payments

Ideally, you'd always pay off your balance in full each month. But if you can't, prioritize making at least the minimum payment by the due date. Missing your payment's due date by even a couple of days can mean paying late fees to your credit card company. Even more important, however, is the long-term damage a payment missed by 30 days or more can do to your credit scores. A late payment will remain on your credit report for seven years.

To avoid late payments, sign up for autopay, set a reminder on your phone, schedule early payments or take advantage of any features that your credit card company offers to help you make all your payments before the due date.

If you're ever in a bind and can't afford to make a payment, contact your card issuer right away and let them know that you're struggling to make payments. Credit card companies are often willing to work with you to come up with a plan, such as extending your payment's due date or offering you a hardship plan.

4. Use Credit Cards to Help Track Your Spending

Credit cards can work alongside your budget to help you monitor your spending and streamline your bill payments. Here are some savvy ways to use credit cards to manage your spending:

• View your spending by category. Your credit card statement includes a complete overview of all the purchases you make on your card, offering a window into your spending habits. Analyze your spending by totaling the money you spend in each category over a given month, and then adjust your habits or tweak your budget to stay on track.
• Alert yourself to spending. Using a credit card can feel a lot like paying with a debit card, but in fact you're actually taking on a small loan each time you swipe—which makes avoiding overspending even more crucial. Setting transaction notifications, in addition to checking your balance before you shop, can help you cut back your spending and avoid going over budget.
• Streamline your bill payments. One popular credit card strategy is to charge recurring monthly expenses, such as your phone bill, utilities, streaming subscriptions and gym membership, to your card and then pay off the balance in one lump payment. It requires discipline and careful monitoring of your spending, but with diligence, credit cards can make managing multiple monthly payments simpler. If your card issuer allows you to select your payment's due date, set a date that works well for you, such as the second payday of each month.

5. Make the Most of Rewards

Pick the right rewards credit card and use it responsibly and strategically to maximize your rewards benefits. Here's how:

1. Find the best rewards card for you. People with credit scores above 700 will often qualify for cards with premium rewards structures, but no one card fits everyone. Comparison shop for a rewards card with high rewards rates in the categories you already spend the most in, such as travel, dining, entertainment or grocery stores.
2. Charge all your spending to the card. Using your rewards card for all your purchases in eligible categories and then paying off your balance in full each month can help you maximize the points, cash back or miles you earn for the spending you already do. This is only a good strategy if you know you'll be able to pay off your bill each month and avoid racking up debt on the card. Never overspend or take on debt to earn rewards: The money you'll lose to interest will negate the value of any rewards.
3. Combine cards. You can diversify your rewards by selecting multiple rewards cards with different reward categories and earning structures. For example, you might choose a credit card with a general spending rewards rate of 1% to 2% cash back. You might then use a second card that earns more rewards, possibly in the form of points or miles, in a favorite category, such as restaurants and dining. Make sure you have experience responsibly handling one credit card before you branch out, as managing multiple cards means more risk of overspending.

6. Save Money With Introductory 0% APR Offers

If you're shouldering a credit card balance that you can't pay down right away, the money you're paying in interest can make getting back on track even trickier. A balance transfer card with a 0% introductory APR can help you save money while you pay down the debt.

Just be sure to commit to paying down your balance before the introductory APR period ends to avoid high interest charges, and avoid racking up any more debt in the meantime.