How to Use Credit Cards Wisely to Build Wealth, Not Debt
Credit cards are often seen as dangerous, but when used correctly, they can actually support wealth building. The key is to treat them as a financial tool, not free money.
The most important rule: never carry a balance if you can avoid it. Interest rates on credit cards are among the highest of any debt, often exceeding 20%. Paying in full each month avoids these charges and helps build a strong credit history.
Credit cards also offer benefits like cash back, travel rewards, and fraud protection. When used strategically, these perks can save or even earn you money. However, rewards only make sense if spending stays within your budget.
Keeping utilization low—ideally under 30% of your limit—improves your credit score, which impacts loan rates, insurance costs, and even job applications in some industries.
In short, credit cards are a double-edged sword. Misuse leads to debt, but responsible use builds financial credibility and provides valuable benefits.
