Here’s How to Use a Credit Card the Right Way

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All the financial “experts” will frown and sternly warn you about excessive use of credit cards. And sure, they have a point.

You don’t want unpaid credit card balances that hang around month after month, allowing those greedy credit card companies to rip you off with ridiculously high interest rates.

However, we’ve got a piece of advice that may seem counterintuitive at first. That is, it’s contrary to what you might expect to hear. This might seem to defy common sense, but it works sometimes.

Depending on your situation, maybe you should be getting more credit cards. That’s right, more of them.

No, seriously.

What do we mean by that? Give us a minute to explain.

Why Would You Want More Credit Cards?

Your credit score is important. The better your score, the better deal you’ll get on a mortgage, a car loan, a credit card, a rental car or an apartment lease.

But if you’re using up most of your available credit, that could hurt your credit score. The overall amount of your credit that you’re using is called your “credit utilization ratio,” and it can have a major impact on your credit rating. It counts for about 30% of your score.

If you have more credit cards, you’ll have more credit available to you. You just have to resist the temptation to use all that credit. Don’t max out your cards. Heck, cut some of them up if you have to, but keep them open accounts.

A free service called Credit Sesame can help with all this by recommending credit cards that are a good fit for you — cards that you’ll qualify for and that won’t cost you money to get.

Credit Sesame will tell you what your credit score is, along with a breakdown of what factors are contributing to your score and personalized tips on how to manage your credit better.

See what’s affecting your credit — specifically, see what’s holding you back. Your score will be based on your payment history, how much of your credit limit you’re using and a few other factors.

Once you get more credit cards, though, it’s on you to pay them off every month. If you leave a monthly balance on your cards, you’ll end up paying high interest rates.

It takes just a few minutes to get your free credit score. Your wallet and your credit score will thank you down the road.

Mike Brassfield (mike@thepennyhoarder.com) is a senior writer at The Penny Hoarder. He has a Credit Sesame membership.

More than 60% of Credit Sesame members see an increase in their credit score; 50% see at least a 10-point increase, and 21% see at least a 50-point increase after 180 days.

Credit Sesame does not guarantee any of these results, and some may even see a decrease in their credit score. Any score improvement is the result of many factors, including paying bills on time, keeping credit balances low, avoiding unnecessary inquiries, appropriate financial planning and developing better credit habits.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.