Editorial Policy

How Often Should I Use My Credit Cards?

Eva Norlyk Smith Ph.D.

July 9, 2013

QHi Eva,

How often do you need to use a card to have it count toward your credit? I have two cards, and I was wondering if it's OK to only use them once in a while. Is it better to charge a bunch of things or only one big thing? I'm not sure if it's more important how often I use the card, or how much I charge on it. –– Mya

ADear Mya,

There are several things to consider when it comes to how often you need to use your credit cards. As you seem to already realize, you need to use your cards enough to establish a credit history. You also have to ensure that your credit cards stay sufficiently active for your card issuers to keep the accounts open.Ask Eva

Let's take a look at each of these factors in a little more detail. A major component of FICO scores — the score used most often by lenders — looks at the payment history on your credit card accounts. This component accounts for a full 35 percent of your FICO score, and it is the largest piece of the FICO pie. To establish a healthy payment history, of course, you have to make payments. And, before you can make payments, you have to make charges. So, yes, charging something each month, whether it's a big purchase or a small one, will help you as long as you pay it off on time.

Another component of a FICO score is the credit utilization ratio — how much of the credit limit you're using compared to how much credit you have available. Regularly having small balances on your cards (less than 30 percent of the credit limit is ideal) shows that you can manage a credit account actively without running up huge balances. This is where the size of your purchases becomes important. There's nothing wrong with using your cards for big purchases (such as plane tickets), as long as it doesn't eat up too much of your credit limit. If that's a concern, making a couple small purchases each month is fine. Or, if you do make a large purchase, you can make multiple payments during the month to whittle down the balance as quickly as possible.

Finally, showing that you can manage more than one credit account will also boost your score. A third component of a FICO score is based on credit mix — how many credit accounts you are able to juggle (credit accounts can also include car loans and mortgages). At only 10 percent, credit mix makes up a smaller fraction of your FICO score compared to payment history and utilization, but it's still worth taking into consideration.

So as you can see, based on the way credit scores are put together, regular card usage will benefit your credit. It's also important to use your credit cards regularly to keep banks happy. Some card issuers may close a credit card or reduce the credit limit considerably if a card just sits unused for months on end. As a rough guideline, you have to use the card at least once a year, but preferably more often to protect yourself from unpleasant surprises. Otherwise you might find that a credit line you thought you had access to has been cut or eliminated entirely. Some banks are stricter than others, but why run the risk?

So how can you gain the benefits of regular credit usage without the hassle of multiple credit card bills each month? There are several ways you can simplify. You could take turns, using each card for a period of two or three months at a time. Just charge a few small items that you'd buy anyway, such as gas or groceries, and pay off the bill in full at the end of the month.

The other strategy is to set it and forget it: Set one of your monthly recurring bills up for automatic payment on each card, and then set up each card for automatic payments each month via your bank account. You can set all this up online at the card issuer's website. It will take you less than an hour, and you never have to worry about it again. Just be sure to charge recurring expenses that are the same amount each month, so you always know how much will be deducted from your bank account. Utility bills, for that reason, are not a good candidate, unless you are on a payment plan that charges the same amount each month. And just to be on the safe side, I would recommend you check that all is running smoothly by logging into your card's portal on a regular basis for verification that the payments are going through correctly and on time.

It's somewhat annoying to have to jump through these hoops when you don't really feel the need to use your cards. However, it's an investment in building your credit score, which will pay off handsomely when you're in the market for a major loan, such as a for a car or home.

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