Using credit cards: How to stay in control

Credit cards can be a convenient way to pay, and a useful tool for building credit, when you understand the basics. A credit card gives you access to a revolving line of credit: You can spend (up to your credit limit), pay back what you used, and then that credit becomes available again.

The key is to use your card in a way that supports your budget, not one that creates stress.

When comparing cards, consider where the card is accepted, whether there’s an annual fee or foreign transaction fees, the card’s APR (annual percentage rate), and any perks such as cash back or points. If you plan to carry a balance, interest costs matter more; if you plan to pay in full in each month, rewards and fees may matter more.

Credit card basics

A credit card lets you borrow money up to a set amount called your credit limit. As you make purchases, your balance goes up and your available credit goes down.

You don’t pay for each purchase right away. Instead, your card activity is grouped into a billing cycle, and you’ll get a monthly statement that summarizes what you spent. Each statement includes a payment due date and a minimum payment.

Paying at least the minimum helps you stay current, but paying more (ideally the full statement balance) can reduce interest costs and help you pay off what you owe faster.

If you pay your statement balance in full by the due date, many cards won’t charge interest on purchases. If you carry a balance, interest may be charged based on your APR (annual percentage rate). Check your card’s terms for the details that apply to your account.

Credit card tips for beginners

• Pay on time every month.
• When you can, pay the statement balance in full.
• Try to keep your balance well below your credit limit (lower utilization can help your credit score).
• Review your statement for mistakes or charges you don’t recognize.
• Know your fees (late fees, annual fees, and foreign transaction fees, if applicable).

What you’ll see on your credit card statement

Your monthly statement (paper or online) is your snapshot of the account for that billing cycle. It typically shows your statement balance, minimum payment, payment due date, recent transactions, and any interest or fees charged. Make it a habit to review it so you can track spending and spot errors or unauthorized charges.

Credit card vs. debit card: What’s the difference?

With a credit card, you’re borrowing from a line of credit and paying it back later. If you don’t pay the statement balance in full, you may be charged interest based on your APR.

With a debit card, money is typically withdrawn from your checking account when you make a purchase. Debit can be a simple option for day-to-day spending, but it usually doesn’t help build your credit history because debit activity isn’t reported to the major credit reporting agencies.

Both payment methods are widely accepted and convenient. Credit cards may offer added protections (many issuers provide zero-liability protection for unauthorized transactions) and can help you build credit when used responsibly. Either type of card may charge fees in certain situations—such as using the card outside the U.S.—so it’s worth checking your card’s fee schedule before you travel.