No matter where you’re at on your financial journey, you’ve probably heard some stuff about credit cards. Unfortunately, a lot of popular advice about them is complete nonsense. Credit cards aren’t evil, scary, or complex, but using them correctly does require you to know a few facts that most people are never told.

In this guide, I’ll make one critical assumption: You want your experience with credit cards to be easy and uncomplicated. This is the autopilot guide, not a crazy credit card hacker’s manifesto.

But even on easy mode, you’ll be able to:

  1. Make a consistent profit from those credit card rewards programs you hear so much about, without getting suckered into paying for them, and
  2. Build your credit history and boost your credit score over the long run.

The Only Way to Use a Credit Card

A credit card represents an open line of credit from a bank — basically just another loan you can take. But you’ll notice that borrowing money isn’t among the goals we laid out above. The first and most important thing to understand is that credit cards are not for spending money you don’t have, even though that’s what the banks want you to do.

When you make charges on your credit card, they’re added to your current balance. Each month, you’ll be issued a statement with a “statement balance” on it. If you make the minimum payment the bank asks for on that statement, some of the balance will remain, and you will be charged interest. That’s bad. You should never pay any interest whatsoever, no matter what. Interest rates on credit cards are so high that paying interest negates all the other benefits of using credit cards combined.

Fortunately, there’s a really easy way to avoid paying interest: Just pay your statement balance in full every single month — no exceptions. If you do that, all interest is waived, and you’ll only be paying for the actual purchases you made throughout the month.

The easiest way to make sure that happens is to never let your current credit card balance exceed the money you have on hand. If you always obey the following formula, you’re good to go:

Maximum you can spend = (Checking account balance) − (Credit card balance)

When you follow this formula, you can safely set your credit card to auto-pay the statement balance each month, since there should always be enough money in your checking account to cover it. That means your credit card payments will magically make themselves every month, allowing you to stress less over your finances.

Besides avoiding interest (the most important thing of all) and making your life easier, using auto-pay will cause your credit score to rise over time, too. It ensures that your payments are always made in full and on time, which is the single most heavily weighted factor in calculating your credit score.

Graphic of credit card use guide

Most credit cards offer some type of rewards for using them. Our favorite cards offer rewards in the form of cash back. For example, a card might offer 2% cash back on all purchases. So, every time you spend $100, you get 2 bucks back a little later.

Because of this, you should charge literally everything you buy on your credit card, to maximize the rewards. There are two caveats though: Firstly, make sure you’re not buying extra stuff you wouldn’t have bought otherwise, just to cash in on rewards — that’s illogical. And secondly, any bill that charges an extra fee to pay with a credit card probably isn’t worth using your card on. Usually those are things like rent, mortgage payments, taxes, government-issued bills, and utility bills.

Choosing the Right Credit Card

When shopping for a card, you’re gonna be inundated with information. Luckily, it’s pretty easy to narrow down. If you’re trying to keep your life simple, just ignore every card that carries an annual fee. You don’t have to pay for the privilege of using a credit card.

Remember, you’re planning to pay your statement balance in full every single month no matter what. Because of that, you can completely ignore the interest rate of any card you’re considering. If you’re following the rules of this guide, 0% is exactly the same as 15% or 22% — you’ll never be paying it anyway. Paying interest is for suckers.

So what is important? The rewards program. You might be tempted by airline miles or free hotel stays (especially if you like to travel like us), but ultimately, cash rewards are usually the best. You can always buy plane tickets and hotel stays with cash, but you can’t invest airline points! Aside from that, cash is the easiest reward to redeem — there’s no need to book in advance through some credit card rewards portal. Cash rewards can just be deposited into your checking account or applied as a statement credit immediately without much thought.

If you want to know exactly what card to sign up for, I personally think the Citi DoubleCash card is the best all-around credit card in existence for general use (at the time of writing this article). It has no annual fee, and its rewards are paid in cash: 2% total on all purchases. There are no special spending categories to keep track of. You just get 2% on everything. Easy.

If you’re okay with complicating your life a little, you could scoop up a second card that does have special spending categories, like Chase Freedom Flex. It gives 5% cash back on a rotating category that you have to keep track of (like grocery stores, gas stations, or Amazon), but only 1% on generic purchases. So the strategy is to use it only for the special categories, and put all other purchases on your DoubleCash card.

We keep a constantly updated list of our favorite credit cards on our Recommendations page.

Photo of credit cards in wallets
Left: The Chase Freedom Flex card in Lauren’s fancy Shoe Bakery wallet. Right: The Citi DoubleCash card in my boring Minimalist Wallet (affiliate links).

If you’re a student, or anyone without much credit history, your application may get rejected the first time around for a rewards credit card. In the worst-case scenario, you can seek out a secured credit card, which you’ll be virtually guaranteed approval for. Use it to build your credit history, and then try again for one of the rewards cards 6-12 months later.

We always recommend the best cards we know of, regardless of whether we’ll make any money for doing so. And whenever we do get paid from credit card referrals, the profits go to charity. If you feel like it, you can support this site in other ways that won’t cost you anything.

Credit Card Ninjitsu

This guide was written for sane people who have no interest in jumping through hoops to earn credit card rewards. You could set up everything that’s described on this page in a single day and then just chill.

If that sounds good to you, cool. Kick back and watch your credit score rise as the reward dollars roll in passively. If you want, you can even sign up for a free account with Credit Karma so you can check up on your credit score any time you want.

On the other hand, some people (like me) like to walk on the wild side and tempt fate with advanced credit card strategies. If you’d like to know why Lauren and I have actually signed up for over 40 credit cards ourselves, try out our next-level credit card guide — if you dare.

— Steven

Things change over time. We keep a constantly updated list of our favorite credit cards on our Recommendations page.

Note: We are not professional financial advisors. We’re just a couple of bloggers honestly sharing what has worked for us. Check out our Disclosures page for more information.

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