Experts tell what to buy with a credit card to build credit — and what to avoid – Elite Daily | Gmx Pharm

Construction credit is important if you want to buy a house or a car. Good credit also gives you lower interest rates if you decide to purchase another credit card or apply for a loan. However, if you are new to credit card ownership, knowing what to buy with a credit card to build credit can be difficult. On the other hand, you might also be wondering which items you shouldn’t buy with a credit card in the beginning. For all of these questions you might have, Elite Daily turned to experts at Bank of America and Credit Karma for their advice.

Of course, the first thing you think when you get a credit card is probably not “What should I spend my credit card on to build credit?”. Instead, think about what cute clothes and must-haves for your home to add to your shopping cart. Or if you’re worried about your payments, maybe you’re too scared to pull out your credit card while shopping. Colleen McCreary, Credit Karma’s chief people officer, told Elite Daily, “People often assume that using credit cards has a negative impact on their credit score. However, this is usually not the case. In order to build credit, you actually have to demonstrate that you are able to borrow responsibly, and that usually starts with a credit card.”

When it comes to figuring out how to put your credit card to good use, experts say there are some key things you can buy with a credit card that will build credit and help you in the future. You just have to know what those things are. For anyone wondering, “Should I use my credit card for everything?” here are some credit card tips that will help you answer that question.

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Jason Gaughan, Bank of America’s head of unsecured products, tells Elite Daily that payment history is the biggest part of a credit score. With that in mind, Gaughan says, “It’s important that you always pay your bills on time — even if it’s just the minimum payment.” Gaughan also recommends that you always spend within your means.

Therefore, buying things that you spend money on monthly can be a good way to start building credit, such as: B. Your groceries. McCreary says, “In the beginning, it’s best to buy things that you can pay back in 30 days.” Because you’ve already factored your purchases into your monthly budget, you know you have the money to buy anything you buy, pay.

Just like your groceries, Gaughan also recommends gasoline as one of the everyday purchases within your budget for things you can buy with a credit card. You might even get some perks by using your credit card for these purchases. “For example, the Bank of America Customized Cash Rewards card offers cardholders 3% cashback each month on purchases in a category of their choice, which can help you put some money back into your wallet while building credit responsibly,” shares Gaughan. If you drive a lot, just select Gasoline as one of your categories.

However, McCreary warns, “If you’re able to get a credit card that offers rewards, make sure you understand how to get the most out of your rewards card.” So if you have a card for travel, use it them for travel only. Since gas can play a role, you should check if it qualifies so you can get the most out of your purchase.

If you’re wondering what items not to buy with a credit card, Gaughan says, “Avoid putting large ticket items on your credit card when your credit limit is low.” You want to stay within your means and “when you have expensive ones.” Purchases like paying rent…on your credit card can lead to higher usage, which negatively impacts your credit score.”

While your rent might be something you want to avoid right now, you can always use your credit card to pay for some of your utilities. While you’re starting out, you may not want to have all your utility bills on your credit card, but things like your electric or water bill are a good place to start. McCreary suggests starting small and getting comfortable with your payment schedule before increasing the debt you take on.

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If you’re someone who treats yourself to a coffee every week from Starbucks or your favorite corner coffee shop, this could be a great everyday purchase to add to your credit card. You can easily pay off that $5 latte. However, make sure you actually cash out what you can.

“Remember, if you don’t pay back the initial balance in full before the due date, you’ll eventually have to pay back every dollar you spend, plus interest and fees charged by your credit card company,” McCreary warns. “If you don’t pay off your credit card debt, you could face hefty interest and penalties — not to mention the damage to your credit rating that could haunt you for a long time to come.”

Another small monthly expense that you’re already paying for that could be a good addition to your credit card is a streaming service. McCreary says, “In general, it’s good to use credit for small, recurring expenses like a monthly subscription…and pay it back every month.” So just use your credit card to pay for your Netflix, Disney+, or Spotify.

Another recurring expense McCreary suggests is your gym membership. You’ve already established that it’s within your budget, and McCreary says as long as you stay within that budget, “you’ll never have to choose between paying your credit card bill and covering necessities of life.” So, go ahead and build credit your training.


Irregular purchases within your budget

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If you’re wondering “should I use my credit card for everything,” Gaughan warns against it. He says that while your credit card can be used for a variety of purchases, “the most important thing is to practice responsible spending habits, such as buying a product.” B. Only make purchases you know you can afford and use your credit card balance on time and in full.”

If you know you can afford it, that includes occasional irregular purchases. If you’re about to buy concert tickets or that cute top you saw while shopping online, it’s great to ask yourself, “What should I spend my credit card on to build a bankroll that’s within my budget right now.” If you know you can cash it out fast, maybe that new Rare Beauty Drop or Insta-worthy happy hour cocktail is just one of the things you can buy with your credit card to build credit.

While these are all great things to buy with your credit card to build credit in the beginning, you may also want to use some of the tools provided by your bank for a more personal plan. Gaughan recommends Better Money Habits for all Bank of America users. It’s “Bank of America’s free financial education platform, available to all, that offers a wide range of financial tips and guidance — including how to make loans.”

As an additional tip for building credit, McCreary encourages everyone to “keep your credit utilization under 30%.” You don’t want to max out your card like you’re cher in it clueless Instead, use it when you need it and you’ll have a credit worth boasting about.

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