This article was written by Lynn Joseph on behalf of Sherley Altidor. 

Most people would say that credit cards are a necessary evil. They’re the easiest ways to build credit. If you’re living in America, a good credit score can be the difference between getting a house and getting rejected for every apartment that you apply for.

Building good credit gives you the opportunity to more smoothly rent or purchase better properties in better areas. Credit cards are certainly very helpful when it comes to making purchases that are investments in our future, having lower insurance premiums, and renting a car.

Having a credit card is also convenient while traveling, especially when credit card only perks across the world are in the mix. These perks come into play when you choose a credit card. This is why it is so important to read the contracts that you sign. There are often so many perks that are involved with rewards credit cards that a company may not outwardly show you, so that they do not have to deliver on their end, since they rely on people not reading the fine print. Read the fine print and ask questions. Go to your bank and come with a list of questions for the credit card that you are interested in applying for. If you are unable to go into your bank, call your bank. Do not let anything stop you from asking the questions that you need to ask in order to make the most of your credit card decision.

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It can also be a very helpful financial streamline if you have a separate credit card for your business. This helps not only yourself but your financial advisor and/or tax accountant as they help you establish what you’ve earned, what you can write off on your taxes, and what you either owe the IRS or will be getting back from the IRS at the end of the year. Having your receipts streamlined for your business saves you and all of the professionals working on behalf of your money, a migraine and money. You don’t want any expenses getting lost in the shuffle or mistaken for a personal expense.

The key with credit cards is to respect your limits. Stick with 1-3 credit cards depending on your family needs (one being an emergency credit card) and stay away from store credit cards which are unnecessary in the grand outlook of things. If the goal is to have as little debt as possible, store credit cards are not your friend. There is so much hidden in the fine print, ultimately making these credit cards not worth it. So take a day or an entire weekend to determine the pros and cons of the bank credit card options that you are approved for (interest rates and annual fees vary, for instance) and go from there. Don’t apply for too many credit cards either, just two or three to start, as applying for a credit card may have a minimal negative effect on your credit score. This way, if you only apply for 2-3 credit cards and you are approved for two, you’re all set.

Most people get their first credit card in college, which is the perfect time to start building good credit. Even for someone who is not interested in having a credit card, it could be wise to get one and make one purchase a month, pay off that balance on time, and build your credit score. A good credit score and credit history period is better than no history of credibility when you’re trying to rent your first apartment and have zero proof that you can make payments on time to your tenant. If no bills are in your name, a credit card is an option to consider for creating credit history. With zero or limited credit history, you may need a cosigner for your first credit card if you are not applying for a student credit card. So it’s especially important that you pay your balance on time because another person’s name is attached to your credit history. You don’t want to be selfish and irresponsible and put your owed money onto someone else’s financial plate. Needless to say, be careful who you cosign for if you yourself are asked to cosign for someone and make sure you are responsible enough to handle your payments without a cosigner if you need one so that the cosigner is never needed to fall back on.

Also read: Why Self-Care is Vital / A How to Starter Guide to Self-Care

Becoming an authorized user on someone else’s credit card, (enabling you to use a card in your name tied to their account) is also a temporary option when starting to build your credit. Emphasis on temporary as legally, the authorized user is not financially responsible for payments. This is why Credit Karma makes it clear that being an authorized user is “not a substitute for building up your own credit history.” In addition, if the primary credit card holder doesn’t make sufficient payments on time, their poor score will hurt you. So if you don’t have someone that you trust and who trusts in you, it might be best to look into a single credit card with a small limit and build from there.

In order to build good credit, you must be sure to pay the balance on time, every time. It’s wise to only spend 10% to 30% of the credit line so that you are able to do this. By only buying what is necessary on your credit card and practicing discipline, you save yourself from going into deep debt like millions of Americans. If you need to split payments into twice monthly instead of once monthly before payment is due, that may actually turn out to be better, depending on when your credit score is updated. The status of the payment balance balance and due date for such are major factors into what makes or breaks your credit score.

Maintaining your balance with the lowest amount owed as possible will serve you well in the long run. One thing you’ll have to look forward to going that route is your credit line rising due to you paying in full all of the time. When your credit line raises, so will the 10% to 30% that you’ll be able to spend on items that you need. Notice that I said “need” and not “want.” By only spending up to 30% of your credit line on what you need, you create a discipline of only reaching for the credit for necessities rather than beginning bad habits of reaching for the credit card for personal desires. The key here is to make sure that you’re spending money on items of necessity. Do I absolutely need this right now? If the answer is no, you do not need to be spending money that you do not have and will have to owe later. An easy example would be using your credit card to pay a phone bill vs. using a credit card to go on a weekend vacation. A vacation may be needed for your mental health, yes. You can however find other ways to go about having that vacation. Your phone, however, will be turned off if you do not pay it, cutting you off from future business opportunities for the entrepreneurs out there and those applying for jobs and apartments and so on.

Also read: Why There Is No Alternative To Economic Self-sufficiency

You can certainly close out your credit card, once it is paid in full to avoid a bad hit on your credit score, if you find that you are more comfortable without one. Living without a credit card may entail having to take the longer route to getting financial matters squared away. But it is possible to manage financial matters without a credit card. You just have to decide what is most manageable for you.

How do you manage your credit card(s) or lack thereof? What have you found to be the credit cards with the best reward programs?

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