3 hacks for using your first credit card to level up your finances

Gen Z is reaching for their credit cards at a high rate, and financial gurus want to make sure they know what they're doing.

Courtney Alev, a consumer financial advocate at Credit Karma, sat down with "Financial Feminist" podcast host Tori Dunlap in October to demystify the process of establishing credit as a young adult. Although it might be confusing to understand at first, credit is the backbone of your financial life, Alev said. Credit cards are tools (specifically knives, Dunlap said) that can be used to boost or weaken your score.

Many people share Dunlap's No. 1 rule for credit card payments: Make them on time, and pay in full if you can.

However, monthly bills are the tip of the iceberg when it comes to building credit. If you're starting out, there are small ways to make a big impact on your score.

"Getting a credit card and using it responsibly — that sounds very simple, but it's so important," Alev said.

Start off with small charges

Alev recommends putting small recurring payments on your new credit card. Instead of maxing out your $500 starter limit on one item, charge your Netflix or Spotify bill to your credit card.

"Twelve months go by. You've spent, maybe, $100 on that card," Alev said, referring to the rough cost of a year's worth of a streaming subscription. "It's paid off in full. You have that year of card history."

Building a credit history is important because it shows lenders that you can manage debt responsibly. This helps you qualify for loans, better credit cards, and better interest rates. It can also affect things like renting an apartment, getting insurance, or some job applications.

Pay it off weekly, not monthly

Credit utilization is another factor to consider once you've gotten your first credit card. In her younger years, Alev said, she would buy one thing on her first credit card and see her utilization skyrocket.

"That's when you're using most of your credit that's available to you, and that can hit your credit," Alev said.

To cut away at it, she leaned on the strategy of making payments on her card every five to seven days rather than monthly when the bill came due. That approach can also prevent interest from piling up.

Ask for credit line increases

Financial educator Dunlap's hack for lowering your credit utilization requires willpower.

"Ask for a credit line increase, and then you don't use it," she said.

It's something Gen Z, especially, might struggle with. Alev previously told Business Insider in 2024 that Credit Karma data shows Gen Zers are acquiring debt at a faster rate than any other age group.

Dunlap said her community of finance-focused women has "seen crazy increases" for those who are able to keep their utilization under 10%. Credit line increases can be easy to come by since banks are eager to let you spend money, Dunlap said. The hard part is not touching the new money.

"Don't use it, and suddenly that utilization rate is way lower even though you're doing your normal spending," she said.

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