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Credit Card Rules to Abide By

credit card rulesIf this economy has you thinking about using credit cards for the cash back bonuses, you may want to think twice. Using credit cards effectively can be beneficial because you are earning money on the stuff you would normally spend anyway, but it can be dangerous and make you think you have more money than you actually do. It’s best to consider a few credit card rules to abide by before going hog wild with your credit card!

Related: Find Your Ideal Credit Card

Credit Card Rules to Abide By

This post was written by my friend Corey over at 20’s Finances. This post may contain affiliate links.

In order to protect you from going into large amounts of consumer debt, consider these five do’s and don’ts when it comes to credit cards.

Credit Card Don’ts

Some are obvious, some are not. Don’t do these things with your credit card!!

DON’T Treat Credit Cards as a Loan

The last thing that you want to do when it comes to using credit cards is to treat them as an easy-to-qualify-for loan. If you are wondering how to pay for college or any other major expense, you should consider other options first.

While I always tell people to avoid debt of any kind, credit card debt is one of the worst because it is often the highest interest rate. That means you are most likely paying more money if you don’t pay off your credit card each month than if you were to get a regular loan.

DON’T Spend Money that You Don’t Have

Similar to thinking that a credit card is a type of loan, don’t spend money that you don’t have right now. It may be tempting to buy something on credit because it feels like you are cheating the system, but it’s not worth it. Buying things without the money in your savings account can lead down a dangerous path. Before you know it, you will be in a lot of debt with no way to pay it off.

DON’T Get Store Credit Cards for Small Discounts

Opening up several store credit cards for 10% savings on your purchase is not always going to be worth it. It’s important to remember that credit cards affect your credit score and opening up too many credit cards can actually hurt it.

More importantly, if you find yourself with too many credit cards, it will be hard to keep track of fraudulent charges. It’s possible for someone to get a hold of your credit card information even if it’s not being used. Paying close attention to your statements is the only sure way to protect against this.

DON’T Give Your Credit Card for Someone Else to Use

Whether you authorize it or not, giving your credit card to someone else to use is against the law. While most cashier’s do not check ID these days, you never know when someone will ask for ID and I would hate to think what would happen if you were caught using someone else’s ID.

DON’T Forget that Credit Cards offer More Protection than Debit Cards

Whether you realize it or not, credit cards companies often have a department to follow up reports of fraudulent charges. If your credit card is stolen and charges are made and if you report them quickly enough, my past experience tells me that it’s likely to be removed. It’s not always guaranteed, but much more likely than with your debit card, which offers very little protection other than your pin number.

Credit Card Do’s

Now for the fun credit card rules. What you should actually do with your credit card, and why it makes sense to do so.

Pay off Your Statement Each Month

Essential to reaping the benefits of reward credit cards is paying off your statement each month in full. Otherwise, the interest that you are paying will cancel out any benefits you are getting from the rewards. Paying off your bill each month makes sure that you stay out of debt as well.

Track Your Spending

While credit card statements can be helpful to monitor your spending, it doesn’t mean there will never be mistakes. I always look closely at my credit card statements each month to make sure that I actually approved those charges. I’ve only had one charge that wasn’t supposed to be there in my entire life – but that is one more than I approved. Make sure to be diligent!

Pay Attention to Changes in Agreement

If you own a credit card, the credit card company will send you updates on the contract that you have with them. They have the right to change the terms of the agreement (within certain limitations) as long as they notify you of the changes.

If you don’t pay attention, you could miss something important, like extra money. This happened to me.

I missed an update where my credit card company was changing the cash backs reward system. It used to be that if you waited until you had $200 in cash back, they would give you an additional $50 to make it $250. After a year of using my credit card, I finally got around to cash out my rewards, expecting over $250 in cash, but they changed the policy just weeks before. This mistake essentially cost me $50.

Make Sure Annual Fee (if any) is Worth it

Some credit cards have annual fees. While I generally avoid these credit cards, there are some that will be worth the fee to some specific people. For example, there are several credit cards with travel perks that have an annual fee. The benefits that these cards have are sometimes worth more than the annual fee. If you do choose to have a credit card with an annual fee, make sure to make sure the perks are worth what you paying in the annual fee.

Enjoy the Cash Back Rewards

If you do use your credit card for every day purchases responsibly, make sure to enjoy the cash rewards. Taking the time to monitor your spending and be intentional with what card to use when takes a lot of work. You deserve to treat yourself for being persistent and using the rewards is a nice way to do that. My wife and I save around $400 from using reward credit cards each year and we use it to supplement our vacation fund.

Related: Top Rewards Credit Cards – by Card Benefit

What other credit card rules might you recommend?

Credit Cards


My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.


  1. I am lucky I have always paid off my credit cards and never left a balance in my life.

  2. I recently just started enjoying credit card rewards. I don’t know how I lived without them for so long!

    • I don’t know either! Nice work on the rewards. I am about ready to cash mine in for the year. 🙂 Can’t wait!

  3. For me it’s just all about paying off the card in full every month. If you do that, you will essentially get paid to use the card. As long as you keep that mentality, you should be able to avoid the urge to use it for things you can’t really afford. If you cannot afford to pay it off, ask yourself if you’re really willing to pay that much higher price just to get that purchase now instead of when you can afford it.

    • That’s a great way to look at it Modest Money!

  4. We’ve recently stopped all use of our credit cards, and are trying the whole “living within our means” thing. So much better!

    • Good luck Deanna. Everyone has to find what works for them.

  5. I can’t agree enough with not treating them like a loan and buying only the stuff you were going to get anyways. I max out the cash back, but you have to be smart about how you go about – otherwise you’ll pay more than you receive!

    • Yes, buying things just for the rewards is a dangerous game.

  6. I can’t use credit cards for rewards or discounts or anything. I’m just not capable of stopping myself. I kinda suck like that. BUT I’ve learned that I should not have credit cards and won’t even try to again until I am completely out of debt, have a great savings plan & investing…so pretty much not until I’m in my 80s.

  7. A couple of cash back reward cards also offer additional cash back on purchases (mostly online) when you access the retailer’s website via the credit cards’ program page. Citi’s program is called “Citi Bonus Cash Center” and Bank of America’s is called “Add It Up”. I just earned an additional 8% cash back on my contact lens purchase just for accessing the store through BoA’s page. That’s on top of the store’s bulk discount PLUS a 15% off/free shipping online coupon I located. All-in I saved over $50 on that one purchase. And I never carry a balance or pay an annual fee, so it all goes into MY pocket, where it belongs.

    • That’s a nice tip KC! Thanks for sharing!

  8. We’re completely out of debt, mortgage paid off, etc. We don’t have any credit cards now and I’m starting to see the downside. If I buy $25 in gas, my debit card is hit for $125, not a big deal since we do have that in the bank but it’s the principal of the thing. DH was sent to a school for work, the hotel had already been paid but he had to allow a $50 hold on our debit card to check in. I’m not real happy about paying by debit for online purchases, either, and there is no protection if the number is stolen like there is for credit.

    • I’m not against using credit cards, but you just have to know how to control them. By the way it sounds, you would be just fine. By the way, how does a $25 gas purchase turn into $125? I didn’t follow that.

  9. I think “Don’t spend money you don’t have” is the most important tip. So many people treat credit cards as extra cash in their lives, it’s no wonder they’re carrying so much debt.

    • I agree with you 100%! Just because you’ve got credit doesn’t mean that you should be spending it. Back up your purchases with cash.

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