Credit cards can get a person into a lot of trouble and for good reason. When misused, credit cards can lead to unnecessary debt that can become a financial burden.

But in the right circumstances, credit cards can be a powerful tool to help establish credit. 

In the NeighborWorks Columbus homeownership program, we walk with people through the processes of building a strong financial foundation. This includes creating and maintaining a budget, helping people manage their debts and rebuild their credit scores, and for some it includes establishing credit in the first place. 

This is where credit cards come into play, but many people wonder where to start. Which credit card should you get? How should you use it? These are the questions we will walk through now. 

Who should get a credit card?

If you are struggling to manage your budget, it is not the time to get a credit card. But, if you have successfully built a money management plan and stuck to it, a credit card could be beneficial for you to boost your credit score. 

Which credit card should you get?

There are several credit cards that are known as starter cards. You will want to ensure you don’t get a credit card that comes with a fee. You also want to ensure your card has a relatively low spending limit to start out with so you don’t get into trouble. To get the most benefit from your cards, you also want to get one that reports to all three major credit bureaus. 

How do you use your credit card for the most benefit?

Spending isn’t usually an issue for people, right? If anything we need to be careful to not overspend, whether you’re using a credit card or any form of money. 

But, what we’re talking about here is how to use your credit card in a way that actually provides a benefit to your credit and doesn’t hinder it. 

There are a few key things to make a credit card work for you and not against you. The first is to set a monthly spending limit that is well within your budget. Some people choose to use it to only pay for gas, for example. 

You also want to make sure the spending cap you choose is not the one the credit card company gives you. The best way to use this card is to spend no more than 30% of what your limit is at any given time. So, if your credit card gives you a $1,000 limit, you will want to make sure you never have more than a $300 balance. 

Finally, and most importantly, make sure you pay your entire balance on time, every time. Setting up automatic payments is the best way to ensure you don’t forget.