How to Improve Your Credit Score with Smart Credit Card Usage

Your credit score is one of the most important numbers that shapes your financial life. It affects a wide range of financial decisions—from whether you’ll be approved for a loan or a mortgage, to the interest rates you’ll be offered. A high credit score can open doors to lower interest rates, bigger loans, and better financial opportunities. On the other hand, a low credit score can lead to higher interest rates, denied applications, and an overall harder time managing your finances. Simply put, your credit score has the power to impact your ability to borrow, save, and invest wisely for the future.

1. Understanding the Factors That Affect Your Credit Score

Your credit score is a numerical representation of your creditworthiness, and it’s determined by several factors that the credit bureaus analyze to assess how likely you are to repay borrowed money. The FICO score, which is the most commonly used credit score model, ranges from 300 to 850, and it’s influenced by five main factors. Understanding these components will help you make informed decisions about how to use your credit cards and other financial tools to improve your score.

Let’s break down each of these factors and explore how they contribute to your credit score:

1. Payment History (35%)

Your payment history is the most significant factor, accounting for 35% of your FICO score. This factor reflects your track record of paying bills, including credit card payments, loans, and other types of credit. The more consistently you make on-time payments, the higher your score will be. Missing just one payment, especially if it’s reported to the credit bureaus, can have a significant negative impact on your credit score.

Why Timely Payments Are Crucial: On-time payments demonstrate your reliability and trustworthiness as a borrower. Lenders see you as a lower-risk borrower, which can result in better loan terms, lower interest rates, and higher credit limits. Conversely, late or missed payments, even by just a few days, can damage your score and make it harder to get approved for new credit. These late payments can stay on your credit report for up to seven years.
Credit Card Impact: Credit cards are often one of the first types of credit people use, and making on-time payments is essential to building a positive payment history. Even if you can only afford to pay the minimum payment, it’s crucial to make at least the minimum payment on time each month.

2. Credit Utilization (30%)

Credit utilization refers to the percentage of your total available credit that you’re currently using. It makes up 30% of your FICO score and is a key indicator of how well you manage credit.

How Credit Utilization Helps: Ideally, you want to keep your credit utilization rate below 30% of your available credit limit. For example, if you have a credit limit of $1,000, aim to carry a balance of no more than $300 at any time. A lower credit utilization rate signals to lenders that you are not over-relying on credit and that you are managing your debt responsibly.
Credit Card Impact: If you regularly carry high balances on your credit cards, even if you pay on time, your credit score may suffer. Credit cards are one of the primary contributors to credit utilization. To boost your score, try to pay off balances in full each month or keep your credit utilization low. Additionally, requesting a credit limit increase can help lower your utilization ratio, provided you don’t increase your spending.

3. Credit History Length (15%)

Your credit history length makes up 15% of your score. This factor considers how long you’ve been using credit and how long your individual accounts have been open. The longer your history of responsible credit use, the better it looks to lenders.

The Importance of Maintaining Older Accounts: The length of time you’ve had credit accounts—especially older accounts—shows that you can manage credit over time. Opening a new credit card may lower your average account age, which can temporarily hurt your credit score.
Credit Card Impact: If you have old credit cards, keeping them open and using them occasionally can help increase your credit history length. Avoid closing old accounts unless absolutely necessary, as doing so can shorten your credit history and negatively impact your score.

4. Types of Credit (10%)

The types of credit you use make up 10% of your FICO score. This factor considers the variety of credit accounts you have, including credit cards, mortgages, auto loans, and student loans. Having a mix of different types of credit shows lenders that you are capable of managing various forms of debt.

Diversifying Your Credit Portfolio: While credit cards are important, having a mix of installment loans (such as auto loans or mortgages) and revolving credit accounts (like credit cards) can benefit your score. However, it’s important not to take on unnecessary debt just to diversify your credit—only open accounts you actually need and can manage responsibly.
Credit Card Impact: Having multiple credit cards doesn’t automatically improve your score, but it can help with credit diversification. If you have only one credit card, consider diversifying your credit portfolio by taking on another type of credit (like a car loan) in the future to improve this aspect of your credit score. However, avoid opening too many new accounts at once, as it can hurt your score.

5. New Credit (10%)

The new credit component makes up 10% of your score. This includes any recent credit inquiries or newly opened accounts. Each time you apply for credit, a hard inquiry is made, which can cause a small, temporary drop in your credit score. This is particularly relevant when applying for multiple credit cards in a short period.

How Multiple Inquiries Impact Your Score: A single inquiry may only cause a minor dip in your score, but multiple inquiries in a short period (like applying for several credit cards in a few months) can indicate financial instability to lenders. It can lower your score and hurt your chances of being approved for new credit.
Credit Card Impact: When you apply for a new credit card, it will trigger a hard inquiry on your credit report. While applying for new cards can sometimes be beneficial (for example, if you want to increase your credit limit or earn more rewards), it’s important to apply only when necessary and not rush into multiple applications.

The Role of Credit Cards

Credit cards play a central role in all five components of your credit score. By using credit cards wisely, you can build a positive credit history, keep your credit utilization low, and diversify your credit mix. However, poor credit card habits, such as missed payments, high balances, or frequent applications for new cards, can hurt your credit score. Understanding how credit cards influence each aspect of your credit score will help you make better decisions when it comes to managing your cards and improving your overall credit profile.

2. Key Strategies for Improving Your Credit Score with Credit Cards

Improving your credit score requires a mix of strategies, particularly when it comes to how you manage your credit cards. Credit cards play a significant role in your score, and by using them wisely, you can quickly start to see improvements. Below are some of the most effective strategies for improving your credit score through smart credit card usage.

1. Make Payments on Time

The Importance of Timely Payments

Your payment history accounts for a significant portion of your credit score—around 35%—so making timely payments is critical. Missed or late payments can significantly harm your credit score and stay on your record for up to seven years. Even one missed payment can cause a sharp decline in your score and impact your ability to secure credit in the future.

How Missed Payments Negatively Impact Your Score: Credit card companies report your payment history to the credit bureaus, and late payments are one of the most damaging marks on your credit report. A 30-day late payment can drop your score by 50-100 points or more, and delinquencies can raise red flags for lenders, making it harder to qualify for loans or new credit.

Setting Up Payment Reminders or Automatic Payments

To avoid missing payments, consider setting up payment reminders or automatic payments. Most credit card issuers allow you to set reminders for when your payment is due, and many offer the option to automatically pay either the minimum payment, the full balance, or a set amount each month.

Automatic Payments: Automating your payments ensures you never miss a due date, and it can save you time. Additionally, automatic payments can also help you avoid late fees and interest charges, and they can help maintain a positive payment history, which is essential for improving your credit score.

Conclusion: Making payments on time is the most important factor in maintaining a strong credit score. By using reminders or automating payments, you can ensure you’re consistently making on-time payments and building a solid credit history.

2. Pay More Than the Minimum

The Risk of Only Paying Minimums

While it may seem like an easy option to only pay the minimum payment, this is one of the worst financial habits you can develop when trying to improve your credit score. The minimum payment typically covers only the interest on the balance and a small portion of the principal, meaning your balance will decrease very slowly, and interest will continue to accumulate.

How Carrying a Balance Increases Your Debt and Interest Charges: If you continuously only make the minimum payment, your balance can snowball over time, and the interest charges will continue to pile up. This prolongs the debt and results in you paying far more than the original amount owed.

The Benefits of Paying Off Your Balance in Full

To improve your credit score and avoid paying excessive interest, it’s crucial to pay off your balance in full each month. Paying your balance off entirely helps to maintain a low credit utilization ratio, which is a key factor in your credit score.

How Paying Off Your Balance in Full Helps Your Credit Utilization: By paying off your balance in full, you keep your credit utilization ratio low—generally below 30%—which positively impacts your credit score. A low utilization ratio shows lenders that you are not overextending yourself with credit, which can lead to better terms for future loans or credit.

Conclusion: Always aim to pay your balance in full to avoid accumulating interest and to maintain a low credit utilization ratio. This is a crucial step in improving your credit score and setting yourself up for long-term financial success.

3. Keep Your Credit Utilization Low

What is Credit Utilization?

Credit utilization refers to the ratio of your credit card balance compared to your credit limit. For example, if you have a $1,000 credit limit and a $400 balance, your credit utilization is 40%. Ideally, you want to keep this ratio low to show lenders that you are managing your credit well.

Why Keeping Utilization Low Helps: A high credit utilization ratio signals that you might be relying too heavily on credit, which can increase the risk of default. Keeping your credit utilization low (ideally under 30%) shows lenders that you are using credit responsibly and can help improve your credit score.

Aim for 30% Utilization or Less

To maximize your credit score, aim to keep your utilization ratio below 30%. If your balance is consistently above 30% of your available credit, you should work on paying down your balance to reduce that ratio.

Ways to Lower Utilization:
- Paying Down Balances: If you have a balance above 30%, try to pay it down as quickly as possible. The lower your utilization, the better it will be for your credit score.
- Requesting a Credit Limit Increase: Another strategy is to request a credit limit increase from your credit card issuer. By increasing your credit limit while maintaining the same balance, your utilization ratio will decrease, which can have a positive impact on your credit score. However, avoid using the increased limit to rack up more debt.

Conclusion: Maintaining a low credit utilization ratio is a simple but powerful way to boost your credit score. Pay off your balances promptly, and consider requesting a credit limit increase to help reduce your utilization ratio.

4. Diversify Your Credit Portfolio

The Importance of Different Types of Credit

Having a diverse credit portfolio can help improve your credit score. A mix of credit types—such as credit cards, installment loans (like car loans or personal loans), and mortgages—demonstrates to lenders that you can manage different kinds of debt. This can be especially beneficial when you apply for larger loans, like mortgages or personal loans.

How a Mix of Credit Helps Your Score: The types of credit you use contribute to about 10% of your credit score. Lenders like to see that you can handle various types of credit responsibly, as it indicates you are capable of managing different financial obligations.

How Credit Cards Fit into Your Credit Mix

Credit cards are an important part of your credit portfolio, but they should be complemented by other types of credit, such as an auto loan or mortgage, if you’re looking to improve your score. However, don’t rush into opening new credit accounts just to diversify your portfolio—only take on what you can manage responsibly.

Conclusion: Having a mix of credit types is beneficial for your credit score, but it’s not worth taking on debt you don’t need. Use credit cards responsibly as part of a well-rounded credit profile to boost your score.

5. Monitor Your Credit Reports Regularly

Checking for Errors

Your credit report contains detailed information about your credit history and is the basis for your credit score. It’s important to review your report regularly to check for any errors, such as incorrect late payments, missed transactions, or fraudulent activity.

Why It’s Important to Review Your Credit Reports for Inaccuracies: Even minor mistakes on your credit report can significantly affect your credit score. If you find an error, it’s important to dispute it right away to prevent it from harming your credit standing.

How to Dispute Errors

If you spot an error on your credit report, you can dispute it with the credit bureau (Equifax, Experian, or TransUnion). Typically, you can do this online or by mail. The credit bureau will investigate your claim and correct the error if necessary.

How to Dispute Errors: Start by reviewing your credit report thoroughly. If you see discrepancies, gather supporting evidence (like payment receipts or correspondence) and file a dispute with the relevant bureau. The bureau has 30 days to investigate and resolve the issue.

Conclusion: Regularly monitoring your credit reports is essential for catching errors that could negatively affect your credit score. Dispute inaccuracies immediately to ensure your score reflects your true creditworthiness.

3. Best Practices for Using Credit Cards to Build and Maintain Good Credit

Using credit cards responsibly is essential for building and maintaining a good credit score. However, not all credit cards are created equal, and it’s important to choose the right card for your financial situation. Additionally, how you manage your cards plays a critical role in your overall credit health. Below, we’ll dive into some best practices for using credit cards to build and maintain a strong credit score.

1. Choosing the Right Credit Cards

Secured vs. Unsecured Credit Cards

If you’re just starting to build your credit or have a low credit score, you may be limited to the types of credit cards available to you. A secured credit card can be a great tool for improving your credit score.

Secured Credit Cards: These cards require a cash deposit to act as collateral, which becomes your credit limit. For example, if you deposit $500, your credit limit will typically be $500. Using a secured card responsibly (i.e., making on-time payments and keeping utilization low) will help you build or rebuild your credit. Over time, many issuers will offer an upgrade to an unsecured credit card after seeing responsible usage.
Unsecured Credit Cards: These cards don’t require a deposit and are ideal for those with good to excellent credit. They often come with higher credit limits and may offer more rewards, such as cashback, travel points, or other perks. When you qualify for an unsecured card, it shows lenders that you have proven yourself as a trustworthy borrower.

Conclusion: If you’re building credit, start with a secured credit card and transition to an unsecured credit card once your credit improves. The goal is to demonstrate responsible credit usage to increase your creditworthiness over time.

Student Credit Cards

For young adults or those just starting their financial journey, student credit cards are a good option. These cards are designed for beginners and often have more lenient approval requirements.

For Young Adults or Beginners: Student cards typically have lower credit limits and may come with fewer rewards than other credit cards, but they still allow you to start building a credit history. Responsible usage can lead to a higher credit limit over time, and good credit habits learned early will pay off in the future.
Benefits for Students: Many student cards offer rewards for everyday spending, as well as tools to help you build credit, like credit monitoring. In some cases, these cards may also offer education resources to help students learn about responsible credit management.

Conclusion: If you’re a student or new to credit, start with a student credit card to build a solid foundation for your credit score. Use it responsibly, and you’ll likely see your credit score grow.

2. Avoid Opening Too Many New Accounts

Hard Inquiries and Their Impact

Each time you apply for a credit card, a hard inquiry is made on your credit report. These inquiries are recorded and can affect your credit score.

What Is a Hard Inquiry? A hard inquiry occurs when a lender checks your credit report as part of their decision-making process. While a single hard inquiry may cause a small drop in your score (typically a few points), multiple inquiries in a short period can lead to a more significant decline.
How Hard Inquiries Impact Your Score: Multiple hard inquiries suggest that you might be struggling financially or overextending yourself. Lenders may view you as a higher-risk borrower, which can hurt your ability to get approved for future credit or loans. This is particularly important when you’re applying for larger loans like a mortgage or car loan, where multiple inquiries can impact your approval chances.

Conclusion: Avoid applying for too many cards at once. Limit applications to when they are necessary, as too many hard inquiries can harm your credit score and hurt your chances of being approved for other financial products.

Spacing Out Applications

Even if you’re considering applying for new credit cards, it’s important to space out your applications to protect your credit score.

Why It’s Important to Avoid Opening Too Many Accounts Quickly: Opening several accounts in a short period increases the number of hard inquiries on your credit report and reduces the average age of your credit accounts. Both of these factors can hurt your credit score. A good rule of thumb is to apply for a new credit card only when needed, and allow at least 6 months to a year before making another application.

Conclusion: Space out your credit card applications to avoid excessive hard inquiries and ensure that your credit score remains healthy.

3. Using a Credit Card Responsibly

The Importance of Staying Within Your Budget

Using a credit card to make purchases can be convenient, but it’s essential to stay within your budget to avoid debt accumulation and maintain a good credit score.

Managing Your Spending: Credit cards are meant to complement your existing budget, not to serve as an extension of it. Only charge what you can afford to pay off in full each month. Carrying a large balance and making only the minimum payments will lead to high interest charges and can cause your debt to spiral out of control.
Staying Within Your Means: To avoid overspending, establish a monthly budget that clearly defines what you can afford to charge on your credit card. Regularly reviewing your finances and adjusting your spending habits can keep you from getting into debt.

Conclusion: Use your credit card within your budget to ensure you only spend what you can afford to pay off each month. This will prevent unnecessary debt and help you maintain a healthy credit score.

Being Mindful of Fees

Credit cards come with a variety of fees, and some can be avoided with careful planning and usage.

Interest and Late Fees: If you carry a balance or miss a payment, interest and late fees can quickly add up. These charges will increase your debt and make it harder to pay off your balance.
Cash Advance Fees: Avoid taking out a cash advance unless absolutely necessary. Cash advances often come with high fees and interest rates, and unlike purchases, interest begins accruing immediately.
Foreign Transaction Fees: If you travel abroad or shop with international retailers, be mindful of foreign transaction fees, which can range from 1% to 3% of the purchase amount. Consider using a credit card with no foreign transaction fees if you travel often.

Conclusion: Stay mindful of fees and interest rates to avoid unnecessary costs. Always read the terms of your credit card to fully understand the potential charges, and be proactive in managing your credit card to avoid them.

4. Tools and Resources for Tracking and Improving Your Credit Score

Monitoring and improving your credit score is a continual process, and thankfully, there are a variety of tools and resources available to help you stay on top of your credit health. By using these resources, you can track your progress, make informed decisions, and take proactive steps to enhance your credit score. Below, we’ll explore some of the best tools to help you manage and improve your credit.

1. Free Credit Score Services

There are several free credit score services available online that provide regular access to your credit score and reports. These services allow you to stay informed about changes to your score and give you insights into the factors influencing it. Here are some of the top options:

Credit Karma

What It Offers: Credit Karma provides free access to your credit scores and credit reports from TransUnion and Equifax, two of the three major credit bureaus. Credit Karma also gives you personalized tips for improving your credit score, as well as alerts for any significant changes to your credit report, such as new inquiries or late payments.
Additional Features: Credit Karma provides credit monitoring, personalized offers for credit cards, loans, and refinancing options, and insight into how specific actions (like paying off debt or opening new accounts) can affect your credit score.

Experian

What It Offers: Experian offers free access to your Experian credit score (which is slightly different from your FICO score). You’ll also receive updates and alerts about changes in your credit report, such as new accounts, inquiries, or missed payments.
Additional Features: Experian also offers credit monitoring and identity theft protection in its premium plans, which can give you more robust protection if you’re looking for added security.

Mint

What It Offers: Mint, primarily known for personal finance tracking, also offers a free credit score feature. Mint provides monthly credit score updates and gives you insights into how your financial habits—such as credit utilization and payment history—are affecting your score.
Additional Features: Mint consolidates all your financial accounts in one place, so you can track your budget, bills, and credit score all on the same platform. It also provides suggestions for ways to improve your credit score, based on your current financial situation.

Conclusion: Using services like Credit Karma, Experian, or Mint will give you easy access to your credit score and help you stay on top of any changes. These tools also provide helpful guidance and personalized recommendations to improve your score.

2. Credit Score Simulators

Credit score simulators are tools that let you predict how certain actions will affect your credit score. Whether you’re paying off a balance, increasing your credit limit, or opening a new credit card, a simulator can show you the potential impact of those decisions before you take them. This allows you to make more informed choices about your credit and how to manage it effectively.

How Simulators Can Help You

Projecting Changes to Your Score: Credit score simulators let you input scenarios, such as paying off a certain amount of debt or applying for a new credit card, to see how those actions might impact your score. This helps you understand the potential benefits or risks before making a move.
Making Better Financial Decisions: If you’re considering applying for a new loan, refinancing, or increasing your credit limit, a simulator can show you how these decisions could affect your score. This can give you a clearer picture of what to expect and help you avoid making decisions that could harm your credit.

Examples of Credit Score Simulators:

Credit Karma: In addition to offering your credit score, Credit Karma has a built-in credit score simulator that lets you model different scenarios and see how various actions will affect your score.
MyFICO: MyFICO offers a Score Simulator that allows you to experiment with hypothetical actions to project how they could change your score. It provides a deeper level of analysis based on your FICO score, which is the most widely used credit score by lenders.

Conclusion: Using credit score simulators can help you plan ahead and make smarter financial decisions. By understanding the potential impact of your actions, you can better manage your credit score and avoid any negative consequences.

3. Consider Using Credit Monitoring Services

Credit monitoring services can provide real-time alerts about any changes to your credit report and offer additional layers of protection. These services are particularly beneficial if you’re actively trying to improve your credit score, as they give you immediate insights into any issues that may arise, such as fraudulent activity or sudden drops in your score.

Why Use Credit Monitoring?

Real-Time Alerts: Credit monitoring services will alert you whenever there’s a new inquiry, a change in your credit limit, or a missed payment on your credit report. These alerts allow you to react quickly and address any issues before they negatively impact your score.
Protection Against Identity Theft: If you’re concerned about identity theft, credit monitoring services can help detect fraudulent accounts or activities, helping you take action quickly to prevent further damage.
Track Your Progress: If you’re actively working to improve your credit score, credit monitoring services give you access to regular updates, allowing you to track your progress and make adjustments to your strategy as needed.

Popular Credit Monitoring Services:

LifeLock: Offers both credit monitoring and identity theft protection. LifeLock provides alerts for changes to your credit report and comprehensive services for managing any identity theft issues that arise.
IdentityForce: Provides credit monitoring and identity theft protection with features like daily credit report access, alerts, and fraud detection.
Experian Credit Monitoring: As mentioned earlier, Experian offers credit monitoring services with the added benefit of knowing your Experian credit score and receiving alerts on changes to your credit report.

Conclusion: If you’re serious about improving your credit score or protecting your identity, credit monitoring services offer valuable tools for staying on top of your credit health. These services provide real-time alerts, credit tracking, and identity theft protection, giving you peace of mind and the ability to take immediate action if needed.

5. Common Mistakes to Avoid When Using Credit Cards

Credit cards are powerful financial tools that can help you build credit, earn rewards, and manage your finances. However, if not used properly, they can also lead to debt, fees, and damage to your credit score. By avoiding these common mistakes, you can maximize the benefits of credit cards and improve your credit score over time. Below are some critical mistakes to watch out for and how to avoid them.

1. Maxing Out Your Credit Cards

The Danger of Using Up Your Entire Credit Limit

Maxing out your credit card means using 100% or more of your available credit limit. While it might seem harmless at first, doing so can have a major negative impact on your credit score.

Impact on Credit Utilization: One of the most important factors that affect your credit score is credit utilization—the ratio of your credit card balances to your credit limits. When you use up your credit limit, your credit utilization ratio skyrockets, which can significantly reduce your score. Credit utilization makes up 30% of your FICO score, so high utilization can harm your creditworthiness.
Potential for High Debt: Maxing out your card also increases your risk of accumulating high interest and fees, making it difficult to pay off the balance. This can create a cycle of debt that’s hard to break.
What to Do Instead: Aim to keep your credit utilization ratio below 30%. This demonstrates to lenders that you can manage your credit responsibly. If you have a $1,000 limit, try to keep your balance below $300.

Conclusion: Avoid maxing out your credit cards to maintain a low credit utilization ratio and protect your credit score. Keep balances well within your credit limit and pay down debt consistently.

2. Missing Payments

How Even a Single Missed Payment Can Damage Your Credit Score

Your payment history is the most significant factor affecting your credit score, making up 35% of your FICO score. Missing a payment can have a long-lasting impact on your score and your ability to get approved for credit in the future.

Late Payments and Penalties: Missing a payment, even by just a few days, can trigger late fees and cause your credit card issuer to report the late payment to the credit bureaus. This can lower your score by 50-100 points or more. In some cases, if the payment is 30 days or more overdue, the damage can last for seven years on your credit report.
The Domino Effect: Missing payments on one credit card can also impact other financial products. Lenders may view your missed payment history as a sign of financial instability, and this could affect your ability to secure future loans or credit cards.
What to Do Instead: Make sure to pay at least the minimum payment on time every month to avoid fees and keep your payment history intact. Set up automatic payments or reminders to ensure timely payments, especially if you have multiple accounts.

Conclusion: Never miss a payment! Timely payments are crucial for maintaining a healthy credit score. Set up reminders or automatic payments to avoid missing due dates.

3. Closing Old Accounts

How Closing Older Credit Accounts Can Shorten Your Credit History and Hurt Your Score

Many people close old credit cards when they’re no longer using them, thinking it’s the best way to manage their accounts. However, this can actually harm your credit score.

Impact on Credit History Length: The length of your credit history makes up 15% of your credit score, and closing old accounts can shorten your overall credit history. A longer credit history reflects positively on your ability to manage credit over time, which can help boost your score.
Effect on Credit Utilization: Closing a credit account can also affect your credit utilization ratio. If you close a card with a high credit limit, you’re lowering your overall available credit. As a result, you may be using a higher percentage of your remaining credit limits, which can increase your utilization ratio and harm your credit score.
What to Do Instead: If you don’t want to use a credit card, try keeping the account open, especially if it has a long and positive payment history. However, if the card has high fees or you’re concerned about potential misuse, you may decide to close it. Just be aware that closing an old account can hurt your credit score temporarily.

Conclusion: Keep your old credit accounts open to maintain your credit history length and credit utilization ratio. Only close accounts if absolutely necessary, and weigh the potential impact on your score.

4. Ignoring Fees

Why High Interest Rates and Fees Can Add Up Quickly

Credit cards can come with a range of fees, including annual fees, late payment fees, foreign transaction fees, and cash advance fees. Ignoring or underestimating these fees can undermine your efforts to build credit and increase your debt over time.

High Interest Rates: If you carry a balance on your credit card, high interest rates can lead to significant interest charges, which will increase your total debt. Over time, interest charges can add up and make it difficult to pay off your balance.
Late Payment and Other Fees: Missed payments can result in late fees (which can be as high as $40) and, in some cases, an increase in your APR. Additionally, cash advance fees and foreign transaction fees can quickly escalate your costs if you’re not careful.
What to Do Instead: Pay attention to the fees associated with your credit card, and aim to avoid them. Pay off your balance in full each month to avoid interest charges, set up payment reminders to avoid late fees, and use cards with no foreign transaction fees if you travel internationally. If your card has high fees, consider switching to one with lower or no fees.

Conclusion: Be mindful of the fees your credit card charges, as they can quickly undermine your efforts to build credit. Always aim to pay off your balance on time and in full to avoid interest and fees.