If you’re saddled with credit card debt, you’re not alone. In the last quarter of 2025, average credit card balances increased by 5.5% from the previous year to $1.28 trillion, according to the Federal Reserve Bank of New York. Also, according to a 2025 Bankrate survey, 48% of cardholders carry credit card debt from month to month. Considering the average credit card interest rate in the U.S. is 25.32% as of March 2026, many Americans could end up paying quite a bit in interest.
Using your credit card wisely can help you avoid making hefty interest payments, and it can have a positive impact on your credit, since 30% of your FICO® Score is determined by your amounts owed. If you’re working on getting out of — and staying out of — credit card debt, here are some tips on being a savvy credit card user.
Key Points
• Paying off your credit card balance in full can help you avoid high interest rates and maximize reward points.
• Taking out a personal loan can be a helpful way of consolidating credit card debt.
• Building an emergency fund can help you avoid turning to credit cards.
• Keeping your credit card open after paying off your balance benefits your credit score.
• It’s important to keep the amount you owe low, as this makes up 30% of your credit score.
How to Use a Credit Card Wisely: 7 Tips
If you have a credit card, it’s important to use it responsibly. Here are some tips to ensure your credit card usage stays in check.
1. Always Try to Pay Off Your Statement Balance in Full
With average interest rates topping 25%, credit cards can be a very expensive way to borrow money. It’s important to pay off your statement balance in full after each billing cycle to avoid high interest charges.
If you’re already in the habit of paying your balance in full when it comes due, you could consider leveraging your credit card spending to earn favorable reward points, such as points toward travel or cash back rewards.
2. Cut Your Interest Rate if You Have Credit Card Debt
If you have a large balance or multiple cards, paying off your credit card debt is likely top of mind. It could help to consolidate your credit card debt with a personal loan. Debt consolidation generally makes sense if you can get a lower interest rate than you’re currently paying on your balances. This can help you save money and pay your debt off faster. Debt consolidation also simplifies repayment by giving you just one bill to pay each month.
If you have a large balance on just one card, you might look into getting a 0% interest balance-transfer credit card. You can then transfer your current high-interest debt onto that card (while ensuring to pay it off during the promotional period to get the interest-rate savings). However, you generally need good or excellent credit to qualify for a 0% interest card. Also, keep in mind that balance-transfer credit cards typically charge a fee of 3% or 5% of the total balance you transfer to your new card.
Recommended: Balance Transfer Credit Cards vs Personal Loans
3. Make Sure to Pay on Time
This one may seem like a no-brainer, but it’s still worth discussing. Paying your statement balance late, even one day after the due date, can trigger a steep late fee, on top of interest if you’re not paying off the card in full. Also, since payment history counts for 35% of your FICO Score, paying late can potentially hurt your credit. Consider putting your credit card bills on autopay if you have a history of occasional late payments.
4. Build an Emergency Fund to Avoid Turning to Credit Cards in a Bind
Emergencies happen and, ideally, you’d be able to turn to your savings instead of leaning on a credit card to take care of an unexpected expense. If you don’t have an emergency fund yet, it might be a good goal to prioritize once your credit card debt is under control. In general, an emergency fund makes for a much better safety net in these situations.
Recommended: Why Having Emergency Savings Should Be a Financial Priority
5. Use the Snowball Method to Help Pay Off Debt More Quickly
If you’re paying off multiple debts, the popular snowball debt-payoff method may help you pay them off faster. Here’s how it works:
• Make a list of all your debt balances from smallest to largest, then target the account with the smallest balance to pay off first. Put extra money toward that balance each month while paying the minimum on the others.
• Once the target account is paid off, add the amount that you were allocating to that debt to the next-smallest balance, while paying the minimum on the rest.
• Repeat this process until all debt balances are paid off.
For many, this method works by providing incremental victories from knocking out smaller debts, which can provide momentum for tackling larger balances.
Recommended: How to Pay Off Debt in 9 Steps
6. Keep Your Card Open Even After You Pay Off the Balance
Having access to available credit that you don’t use can help to improve your credit profile. This is because you’ll be using a smaller percentage of your available credit. Remember, “amounts owed” accounts for 30% of a FICO Score. One of the elements that FICO considers in this factor is your credit utilization ratio — how much of your available credit you are actually using.
To lower your credit utilization, it can help to keep a card you’ve paid off open. If you do use it, pay off the balance in full each month.
7. Try Sticking to Cash to Reduce Credit Card Spending
Paying in cash rather than putting everything on the credit card can help you control your spending. The key is to withdraw a set amount of cash to cover your expenses for the week and only spend that amount.
To try this method, decide how much you need to spend each day and put that amount of cash in your pocket. When it’s gone, you’re done spending for the day. It may take a lot of discipline, but if it helps you successfully pay off your credit card debt, it could be worthwhile.
Recommended: The Envelope Budgeting Method: What You Need to Know
The Takeaway
Using your credit card responsibly is key to avoiding high interest charges and potentially harming your credit score. You’ll want to ensure you make at least the minimum payment on time each month and, if you can, pay off your balance in full. Other tips for using credit wisely include having an emergency fund and sticking to cash for stricter budgeting.
If you do find yourself in credit card debt, consider exploring solutions such as the snowball method or securing a lower interest rate through a personal loan.
Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.
FAQ
Should I close my credit card after paying off debt?
It’s a good idea to keep your credit card open, even after paying it off. This is because closing your card could potentially hurt your credit score.
What happens if I don’t pay my credit card balance on time?
When you pay your credit card balance after the due date, you’ll usually end up having to pay a late fee. Late payments can also lower your credit score.
How can I pay off debt quickly?
There are various routes you can take to quickly pay off debt. Among those options are taking out a personal loan or using a balance-transfer credit card. If you have multiple debts to pay off, implementing a strategic plan, such as the popular snowball method, can help.
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