Up your money game with a credit card
Edited by: Eric Freeman, Editorial Lead, Credit Cards
A credit card can be a powerful tool for building credit and earning rewards. See how a card can help you reach your goals.
Image: goals-credit-cardsEditorial Note: Intuit Credit Karma receives compensation from third-party advertisers, but that doesn’t affect our editors’ opinions. Our third-party advertisers don’t review, approve or endorse our editorial content. Information about financial products not offered on Credit Karma is collected independently. Our content is accurate to the best of our knowledge when posted.
How can a credit card help me build credit?
A credit card can help you build credit history and improve your credit scores as long as you make on-time payments each month and keep your card balances well below your credit limit (your total available credit).
Here’s how a card can help with key credit factors:
1. Payment history
Paying your bill on time every month is one of the most effective ways to build good credit.
2. Credit usage
Credit cards come with a credit limit — the maximum amount you can spend with the card. The less available credit you use, the better. Aim to stay below 30% — if your limit is $3,000, keep your balance below $1,000 to help your credit.
3. Length of credit history
A card will contribute to the length of your credit history as long as it remains open. A longer credit history improves your scores, so it’s a good idea to keep your oldest card account open even if you don’t use it often.
4. Credit mix
A mix of cards and loans benefits your scores. If you don’t have one, a card can be a simple way to add to your credit mix.
Reality check
Image: true falseA: False. Applying for a card can actually lower your score a little temporarily. Why: Credit card issuers usually conduct what’s called a hard credit inquiry before deciding whether to approve you — and credit scoring models consider hard inquiries a negative. So try to avoid applying for a bunch of cards at once. Research card options and requirements, and apply only for those you’ll likely qualify for.
Image: Freelance worker wearing earphones and text messaging on smartphoneHow can I avoid credit card debt?
There’s no getting around it — credit cards can be risky. If you spend more than you can pay, you can get trapped in a cycle of debt and hurt your credit.
Here are some ways to help keep your credit and finances healthy when using a card:
Try to avoid carrying a balance. When you carry a balance on your card from month to month, you end up paying more in interest. You also risk racking up debt and high credit usage, which can hurt your credit. Do your best to pay your bill in full every month, or create a plan to pay off your balance quickly.
Pay your bill on time. Even if it’s not possible to pay your bill in full every month, do your best to make the minimum payment by the due date. If you make a late payment — or miss a payment altogether — you’ll be hit with interest and late fees and likely see a significant drop in your credit score.
Know your card’s fees. Interest and late payment fees are just a few of the costs that come with most credit cards. For example, late payments might raise your annual percentage rate, or APR, on purchases. Check the card’s terms and conditions for all the info.
What is an APR?
Your credit card APR determines how much you’ll pay in interest in fees. Check out the video for more details.
5.79%
Year-over-year growth in average credit card debt for Gen Z
Gen Z has the fastest-growing average credit card debt
| Generation | Growth in Q4 2025 vs. Q4 2024 |
|---|---|
| Gen Z | 5.79% |
| Millennials | 2.64% |
| Gen X | 1.30% |
| Boomers | -0.34% |
| Silent Generation | -3.13% |
Based on the average aggregated reports of roughly 99.5 million Credit Karma users. All aggregate data analyzed was pulled on January 5, 2026, and came from members’ TransUnion credit reports. Averages based on information from the previous 90 days.
Compare: Credit cards vs. buy-now, pay-later
Credit cards can be good for a bigger purchase if you’re using your card to build credit and can pay it off before you’re charged interest. Many buy-now, pay-later loans let you take a bit longer to pay without interest, as long as you make installment payments as promised.
Credit Cards
Affects your credit scores: Yes
Payoff deadline: No. Cards are “revolving credit” (indefinite monthly payments).
Requires a hard credit check: Yes
Late payments can negatively affect credit: Yes
Interest builds on unpaid balance: Yes
Buy Now, Pay Later Loans
Affects your credit scores: Sometimes. BNPL credit reporting is not consistent.
Payoff deadline: Yes. BNPLs have a set number of payments.
Requires a hard credit check: No
Late payments can negatively affect credit: Yes
Interest builds on unpaid balance: No (for typical six-week payment plan)
Which statement best describes your credit card needs?
Got questions? We have answers.
Prepaid cards do not build credit. As with debit cards, your payments come out of a pre-funded account so there’s nothing to repay and no payments reported to the credit bureaus.
While “credit card” and “charge card” are sometimes used interchangeably, they’re very different kinds of cards. A charge card typically requires you to pay back your bill in full every month, while a credit card allows you to carry a balance, and you’re charged interest on the balance. Charge cards are rare and usually require excellent credit.
There’s no magic percentage to maximize your credit score, but it’s commonly agreed that you should aim to use no more than 30% of your available credit to keep scores healthy. Under 10% is optimal if you’re shooting for the highest scores possible, but it’s not required.
You can apply for multiple credit cards at the same time, but each application will show up as a new hard inquiry on your credit report. For that reason, it’s best to find your ideal card first and get a sense of your chances of approval. Look for card issuers that offer prequalification — which generally doesn’t affect your credit — or use marketplaces like Credit Karma to get some insight into your approval odds.
Retail credit cards, also known as store credit cards, can build credit as long as the issuer reports your activity to at least one of the three main credit bureaus. But store cards can come with limits. For instance, some retail cards are “closed-loop,” which means you can’t use them outside of the associated store.
Making multiple bill payments per month may increase your scores if the extra payments are made before your statement date, and you don’t take on additional card debt each month. Credit card issuers typically report your card balance to the credit bureaus around the time of your card statement date. If you pay down your balance before that date, you can lower your credit card utilization, which can boost your score.