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[2023] How I Use My Credit Cards Wisely to Build Wealth

Updated: Aug 14

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We’ve all heard the stories and received the lessons about using credit cards wisely. Best practices are well documented seemingly all over the Internet.

But what isn’t as well documented are the ways in which you can use your credit cards wisely, while also making financial decisions that will help you to more easily build wealth.

Credit cards really can be a classic catch twenty-two. Use them wrong, and they can easily and quickly become a disaster. But when you use them to your advantage, they can quickly become a great tool.

Today, I’m back to show you how I use my credit cards wisely and build wealth at the same time.

How to use a credit card wisely

Before I get into the ways in which you can use your credit cards to build wealth, it is important to go through 4 basic principles you need to do to use your credit cards wisely.

1. I never carry a credit card balance

Is critically important that you pay off your credit card info every month. If you are already in credit card debt, you will want to do whatever you can to reduce your outstanding debt load month over month.

Making your payments in full guarantees that you will never have to worry about the absurd interest rates that most all credit cards carry.

But along the lines of not carrying a balance, I do what I can to clear my credit card balance multiple times per month. The reason for this is because credit reporting companies, such as Experian, Equifax, and TransUnion will take a look at your credit utilization ratio once per month to update your credit score.

If you have a high utilization ratio on the day your information is pulled, your credit score may suffer. I’d rather make a couple of payments per month, just to be safe, especially because I use my credit cards regularly and recurring expenses so that I can maximize my cashback and rewards.

2. I keep my utilization as low as possible

I mentioned that I like to use my credit cards to pay as many of my monthly expenses as I can. I do this so that I can take advantage of any and all rewards offered to me. But at the same time, I am very careful to make sure that I keep my credit utilization as low as possible.

Most experts advise that you should never use more than 30% of your available credit in any given month. To be safe, I try to keep my utilization around 10% to 15% at most.

If I end up in a situation where my ratio is higher than this during the course of a month, I will make a payment in the midst of a billing cycle to bring my ratio more into line. Some people will see this is overkill, but it is just a best practice that I became comfortable with.

And with a credit score over 800 by the time I turned 27.

3. I never use any special financing offers

Sometimes, when you open a new credit card, the card issuer will offer you some sort of special financing or promotional APR for a period of 6 to 12 months.

I never take advantage of these "special" offers, nor do I ever use any financing options on a credit card anyway.

These special offers are nothing more than an enticing way for credit card companies to get you in the habit of carrying a balance from month to month. Plus, the second you start to carry a balance, it tends to become harder and harder to pay it off.

4. I rarely open new credit cards

Another no-no to using your credit cards wisely is routinely opening new cards, regardless of your motive for doing so. In my opinion, it doesn't matter if you're looking to capitalize on a new offer, trying to increase your credit limit, or receive a discount on a large purchase you're planning to make.

I've only ever had three credit cards in my life, and when combined with my home and car loan, offers enough of a credit mixture to still get my score to that 800 threshold.

When to open new credit cards

Of course, there are always exceptions to the rule. There are times when it can be a good idea to open an additional credit card.

Some examples of this include:

  • If you have a thin credit file

  • Taking advantage of lucrative cashback offers

  • Special cardmember perks, such as airport lounge access

How I've used my credit cards to build wealth

Now that I've covered the four basic principles that I follow to use my credit cards wisely, I want to pivot and discuss how wise individuals (like myself!) can use their cards as a way to build wealth.

1. Maximize your cashback rewards

I love using my credit cards to pay as many of my expenses as possible.

The credit card that I used to pay most of my bills offers me 2% cashback on all of my purchases with no limits whatsoever.

And while this may not seem like much, it does really add up over time. For example, my electric bills in the summer tend to be between $400 and $500 per month. That means that if I charge this bill, I am directly putting $8-$10 per month back into your pocket.

To build my wealth more quickly, I’ve set up my rewards to automatically deposit my cash back into my Roth IRA. Not only does this help me lower my monthly bills, but it also helps me to save for retirement at the same time.

Of course, even when I do this, I keep a close eye on my credit utilization and make payments in the middle of the month as required.

Do you keep in mind that many other guys on the Internet advise you to never pay monthly bills on credit. Generally, this advice is geared towards helping Americans living paycheck to paycheck to avoid accruing credit card debt.

This means that you should only try to maximize your cash back rewards if you know you were going to be able to make your payments in full.

Other credit cards offer different cashback amounts based on categories like travel, dining, gas, and more. In situations like this, it is up to you to figure out how to maximize your rewards.

2. Building credit

Many Americans don’t see the overlap between building credit and building wealth, but there is a definite correlation.

If you build good credit habits now and use your cards wisely, you will set yourself up for a lifetime of favorable interest rates and terms whenever you need to borrow money. Over the life of a loan, particularly a 30-year mortgage, these more favorable rates can save you thousands of dollars.

For example, consider financing it $350,000 home at 5% versus 6%.

Borrowing this money at 5% on a 30-year mortgage will leave you with an estimated monthly payment of $1,879. Next, let’s assume that your credit wasn’t quite as advantageous by the time you bought your home. If you had to finance your home at 6% instead, you’d be looking at a new monthly payment of $2,098.

Essentially, your subpar credit score will cost you an extra $219 a month for the life of your loan. Over 30 years this equates to an extra $78,840.

3. Money saving balance transfers

Earlier, I mentioned that I don’t recommend using credit card promotional offers to finance any large purchases that you’re thinking about making. However, the one time in which it may make sense for you to take advantage of a promotional APR offer would be in the event that you have existing credit card debt already that you were looking to transfer to a lower interest rate.

If you were thinking about a card with an introductory 0% APR on balance transfers, for example, you may be able to save yourself some money while paying off your debts at the same time. This, in turn, will help you to build wealth more quickly.

Of course, this is dependent on the interest rate your debt will carry in the event that your introductory offer expires before you pay off all of your debt. You don’t want to take advantage of a short offer if you’re not going to be able to make much progress on your debt, only for it to end up at a higher interest rate.

This makes it critically important they read the fine print, the terms and conditions, and ask any questions you have before you take action.

But in the same way that taking out a mortgage at a lower interest rate can save you money, reducing the interest rate on your credit card debt can do the same.

Just make sure that a lower interest rate doesn’t lead you into a false sense of security, where you take on more debt.

4. Take advantage of extended warranty protections

Many Americans don’t even realize that many credit cards on the market actually offer protections on products that you buy. For example, my credit card affectively doubles any warranty that may come on a product already.

This means that if I buy, a television with a one-year warranty, for example, I really have a two-year warranty. And while this may not feel like building wealth, it absolutely can help you do so, particularly if it helps you avoid costly repairs or replacements of appliances and other products throughout your home.

And while I have never had to use the extended warranty protection plan that my credit card carries, it definitely provides me with peace of mind knowing that my purchases are protected.


When used properly, credit cards can be an excellent way to look after yourself financially and build some wealth too!

How do you use your credit cards to your advantage? I want to hear from you in the comments below!

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About Nathan Zarcaro

Nathan Zarcaro is the founder of The Student Debt Destroyer and is passionate about personal finance related causes.  A 2018 graduate of Providence College's Liberal Arts Honors Program, Nathan studied Finance, and worked for one of the world's largest asset management firms before starting his own consulting practice.  In his free time, Nathan enjoys playing golf and traveling with his wife Brigid.

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