Chip Lupo, Credit Card Writer
@CLoop
A credit card is used to make purchases, balance transfers, and cash advances against a line of credit. When a cardholder uses a credit card, they’re borrowing money from the credit card’s issuer and agreeing to pay back at least part of the balance every month, usually with interest, until the balance is paid in full. How much you’ll pay in interest depends on the credit card you have and how you manage the account.
What a Credit Card Can Be Used For
To build credit
You can build and maintain a solid credit profile by paying your credit card bill on time every month and by keeping your credit utilization low. Even having a credit card that you don’t use can be a boost to your credit.
To earn rewards
Some credit cards offer rewards on purchases. You’ll earn points, miles or cash back, which you can later redeem for travel, gift cards, statement credits or a check, among other options, depending on the rewards card. Some cards also have sign-up bonuses.
To finance purchases or transfer a balance
Credit cards with promotional 0% APR offers allow you to finance big-ticket purchases over time or pay down existing high-interest debt with a balance transfer, depending on the offer. Intro periods typically last between 12 and 18 months, and once the 0% rate expires, the card’s regular APR will apply daily to any unpaid balance.
It’s best not to carry a balance from month to month when a credit card’s regular APR is in effect, if you can avoid it.
To get emergency funds with a cash advance
A cash advance is a way to use your credit card to withdraw cash against the card’s credit limit. This approach is not advised, though, as cash advances are very expensive. You’ll pay a fee, usually 3% to 5% of the transaction amount, and interest starts accumulating daily at the card’s high cash advance APR right after you withdraw the cash.
If you’re struggling to find the right credit card to use, check out our editors’ picks for the best credit cards, selected from more than 1,500 credit card offers.
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What happens if you don't use your credit card?
The short answer is that nothing is likely to happen if you don’t use your credit card for a few months. Not using your card could actually help your credit score if you have a $0 balance when you stop (contrary to some common myths about keeping a small credit card balance being beneficial).
The longer answer is that exactly what happens if you don’t use your credit card depends on which card you...
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