In the 1990s, prominent personal-finance gurus were nearly unanimous in offering a straightforward instruction to their debt-ridden followers: Cut up your credit cards!

Unfortunately for the people who followed this guidance, it turned out to be a piece of bad advice. After all, open accounts in good standing look good on your credit report, and if you do close your accounts, you might have trouble opening new ones in the future. Worse yet, people with inadequate access to credit are often left with no option but to patronize payday lenders to meet emergency financial needs — and payday-loan shops can charge as much as 300% APR or more!

Yes, intelligent consumers must exercise discipline when using credit cards. We should think of credit cards as our friends. They make our lives easier and allow us to buy things we might not be able to afford, but they can also serve as virtual income sources themselves!

For example: If you have a credit card with a billing cycle that ends the first of each month, your payment may not be due until the fifteenth. Finance charges (interest) are typically assessed only on the previous balance on your card, meaning that if you pay it off in full each month, you pay no interest, so you’re getting a great deal! But of course, to get these benefits, you have to use your credit cards wisely, and therefore to get the most out of your credit cards, you should look out for the following:

Make sure your card doesn’t have an annual fee

A $30 annual fee on a $1,000 card is the equivalent of 3%+ interest on your APR. Only credit-card users trying to repair their bad credit should accept yearly fees.

Always pay the minimum

If you have any financial problems whatsoever or are just a little forgetful, always pay the minimum payment immediately upon receiving your bill. You can pay more (hopefully the entire balance) later in the month, but missing even one minimum payment can put a serious ding in your credit rating.

Automate your life with credit cards

Set up your credit cards to pay some of your recurring bills, such as your streaming services payment, your cellphone bill, etc. If you use one card for this purpose, you will never exceed your credit limit, and you’ll never have to worry about forgetting to send in a check for your bills — which can also damage your credit.

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