---
title: '5 Lessons Credit Card Beginners NEED To Learn'
source: 'https://youtube.com/watch?v=2WLZY7aJ7Ak'
video_id: '2WLZY7aJ7Ak'
date: 2026-07-28
duration_sec: 820
---

# 5 Lessons Credit Card Beginners NEED To Learn

> Source: [5 Lessons Credit Card Beginners NEED To Learn](https://youtube.com/watch?v=2WLZY7aJ7Ak)

## Summary

This video presents five essential credit card lessons for beginners, focusing on avoiding common pitfalls like high-interest debt and credit score damage. The host emphasizes building an emergency fund, treating credit cards like debit cards, paying full balances monthly, managing credit utilization, and maintaining a perfect payment history.

### Key Points

- **Emergency Fund Essential** [00:50] — Having an emergency fund of six months' expenses in savings prevents relying on credit card debt for unexpected costs like car repairs or vet bills.
- **Treat Credit Card Like Debit** [03:22] — Viewing a credit card as a substitute for a debit card (only spending money you already have) avoids the trap of using the bank's money and carrying debt.
- **Ignore APR, Pay Full Balance** [05:39] — Paying the full statement balance by the due date eliminates interest charges, making the APR irrelevant. Minimum payments should be avoided as they lead to interest.
- **Keep Credit Utilization Low** [07:18] — Credit utilization (balance ÷ limit) should be kept below 30% (ideally under 10%) to boost credit scores. Prepaying before the statement closing date can lower reported utilization.
- **Never Miss a Payment** [10:40] — Payment history makes up 35% of a credit score. Set up automatic payments or reminders to avoid late payments, which can stay on credit reports for seven years.

## Transcript

so if you're a beginner with credit
cards it can be exciting with all the
possibilities to get sign up bonuses
cash back points and a bunch of other
cool things but the truth is that as a
credit card beginner that's also the
most dangerous time for you because
there's plenty of ways that you can
easily slip up and make some common
mistakes that have some pretty bad
consequences these consequences include
things like getting into high interest
credit card debt big drops in your
credit score and some other general
struggles with money that many people
could have avoided that's why in this
video we're gonna go over the five
credit card lessons that beginners need
to learn because these five key lessons
can help anyone to get the positives out
of credit card usage without any of
those bad things that some of you might
be afraid of so as always let's not
waste any time here and just get right
into it make sure to go ahead and tap
the like button down below and subscribe
as well to get this video pushed out to
more people but this first lesson that i
want to talk about here is easily the
top thing that many people skip over
even though it's so important and that
lesson is to have an emergency fund in
place when using credit cards now i know
this might sound boring but hear me out
because the reason for having an
emergency fund is simple for the most
part we all have a good idea of what we
expect to spend money on each month when
it comes to expenses like rent groceries
gas and other typical things like that
but there's also many other unexpected
expenses in life that are guaranteed to
pop up that we overlook in our budgets i
know that for me in the past i've had to
randomly pay several hundred dollars to
get new tires for my car or maybe a
couple hundred dollars to take my cat to
the vet just things like that that cost
extra money that i didn't plan to spend
so because of those unexpected expenses
i've made it a priority over the past
few years to build up an emergency fund
of six months worth of estimated
expenses in a savings account that way
i'm prepared if a random expense pops up
i can pay with my credit card to get
points but then i pay off that balance
immediately because i have the
flexibility to do that now unfortunately
that's not what everyone does because
for most people that don't have those
extra cash savings set aside they still
might use a credit card to pay for those
unexpected expenses however they might
only be relying on future cash flows to
pay off that credit card balance now
under normal conditions that might work
if you have a rough estimate of what
your income minus your expenses will be
each month but honestly we all should
know that life isn't always perfect and
things don't usually go according to
plan i mean what if several expenses
start adding up or you have one huge
expense that costs you several thousand
dollars or what if your income goes away
or decreases for some reason when that
happens you'll still be left with a
credit card balance that you have to pay
back pretty soon but with those cash
flow issues that could lead you to make
the mistake of paying only the minimum
payment and carrying a balance which
we'll get into later in this video so my
point that i'm trying to make here with
this first lesson is that life is
unpredictable and the best defense
against that unpredictability is by
having some sort of a cash safety net to
fall back on and if you don't think that
something like this could happen to you
just think about this millions of people
in the u.s collectively owe almost one
trillion dollars in credit card debt
right i guarantee you that a large
percentage of those people in credit
card debt were just like you and me when
they signed up for those first credit
cards where they didn't have the
intention of carrying a balance ever but
still this debt grows and grows because
the biggest problem with credit card
debt isn't the function of how it works
i mean most of us do know that credit
card debt is bad the biggest problem
with credit card debt mostly has to do
with our own behaviors around how we
handle our money and manage risk based
on our own lives and our own experiences
so play it safe and prepare for the
worst because you don't want to ever
have to turn to high interest credit
card debt financing as your only option
to pay for unexpected expenses now next
for lesson number two this is directly
related to what we just talked about but
it's more of a mindset shift for people
and that lesson is to treat your credit
card like a debit card so you may have
heard me or others on youtube say
something like this before but it really
is the right way to think about credit
cards too many times i'll see people get
a new credit card and they'll see that
they have this new credit limit of maybe
five thousand dollars over here so they
say to themselves that's five thousand
dollars of the bank's money that i can
use for whatever and then i'll just
worry about paying it back later but the
mindset shift that i had early on was to
almost forget about that credit limit
for a minute and pretend that whatever
credit card i was holding said debit on
the front instead now normally with an
actual debit card that card is linked to
your bank account so that any time you
swipe it to make a purchase the money is
simply subtracted from your bank account
to pay that means that without
considering overdrafts in order to use a
debit card you actually need to already
have that money in your bank account so
the transaction can go through now with
a credit card we're involving a third
party with the credit card issuer and
like i said a lot of people view this
like they're using someone else's money
with that credit limit but i've never
really looked at it like this i've only
looked at my credit card as basically a
substitute for my debit card by making
sure that i've already got plenty of
cash set aside in my bank account before
i use my credit card for anything and
this goes back to the whole emergency
fund thing i think it's a good idea to
have some money set aside in a savings
account for emergencies along with some
money set aside in a checking account to
pay certain bills and to pay off credit
card balances so because i keep several
thousand dollars in cash in my bank
accounts that i can easily access it
doesn't matter if i have a 100 trip to
the grocery store or i need to make an
800 tire replacement i know that i can
use my credit card to pay for those
things because i can pay off that credit
card balance whenever i want and because
of that i get a few benefits by simply
substituting my debit card for my credit
card as my preferred method of payment
first i earn points or cashback that i
can put towards my travel expenses that
way i travel almost completely for free
i also have increased my credit score
pretty quickly so that now it sits in
the high 700s because i've learned the
importance of payment history and credit
utilization those are two things that
i'm gonna get into in just a minute as
well because in this video those things
are so important for beginners
especially to understand and
additionally i don't pay any interest
from credit cards because i pay off my
cards in full each month which leads me
to lesson number three and that is
actually to ignore the apr and minimum
payment amount on your credit card
statement and just pay off your balances
in full every month now i'm not saying
that your apr is not important because
you should see the number and see that
it's anywhere from 15 to 25 and that apr
should scare you if you do carry a
balance you want the lowest apr possible
but as a beginner we're trying to avoid
ever carrying a balance in the first
place so the reason we actually want to
ignore that apr is because that number
is irrelevant when you pay your credit
card's full statement balance each month
by the payment due date when you pay
your statement balance in full you won't
be charged any interest so the apr
doesn't matter it could be 1 000 for my
credit cards or it could be 15 it
doesn't affect me because over the past
six or seven years of using credit cards
i've paid off every single one of them
on time and info now i have a full video
here on my channel simply explaining the
whole process for how and when to pay
off your credit card bill which i'm
gonna link to down below but here's just
a few things to know first you're going
to have a billing cycle with an opening
date and a closing date and on that
closing date whatever your balance is on
that day is going to be called your
statement balance now along with that
statement balance you're also going to
see a minimum payment due amount and
that is likely going to be significantly
lower than your statement balance you'll
also see a payment due date which is
typically at least 21 days after that
closing date for this statement where
you have to pay at least the minimum
payment but like i said before we want
to ignore that minimum payment amount
because paying the minimum is what the
credit card companies want you to do
that way the remaining unpaid statement
balance can carry over to the next
credit card statement and they can start
charging you interest at those high
interest rates it's a common myth that
carrying a balance helps your credit
score but that's just not true at all we
want to be paying the full statement
balance instead by that payment due date
all right moving on to credit card
lesson number four which is about
another thing that easily gets
overlooked by beginners because they're
not always aware of it and that lesson
is to keep credit utilization low so
payment history and credit utilization
are the two most important factors
affecting your credit score and credit
utilization basically focuses on two
things your credit card balance and your
credit card's credit limit it's
calculated as a percentage for each
individual credit cards as well as
across all cards combined and the
calculation for this is pretty simple to
understand you just take your credit
card's balance and then divide it by
your credit card limit to see how much
of your available credit you're
utilizing as a percentage now this
calculation is typically done on or
right around your statement closing date
each month when your statement balance
gets reported to the credit bureaus so
for example if my credit card statement
closed on may 15th and my balance on
that date was 500 and my credit limit
was 1 000 and my credit utilization
would be reported as 50 which is
actually too high and likely going to
hurt my credit score now a general rule
of thumb is to keep this percentage
below 30 but ideally below 10 and the
lower the percentage the better so for
me i don't end up using every single one
of my active credit cards every month
but for the ones that i do end up using
i try to keep my credit utilization
maybe around one to two percent i'm able
to intentionally manage this and keep
this utilization percentage so low
because like i said that calculation is
done and reported to the credit bureaus
on the statement closing date each month
so i know that if i actually pre-pay
some of my card's balance before then i
can get a lower utilization reported if
we go back to my example if my statement
closing date on my card was may 15th and
i had a 500 balance with that 1 000
limit i would want to prepay so that my
utilization wouldn't be reported as too
high so what i would do is maybe a few
days before that on may 10th i would
prepay an amount that would decrease my
balance so let's say that on may 10th i
pre-paid 490 that would bring my balance
down to just 10 and when may 15th rolls
around just a few days later and my
statement closes that 10 balance would
get reported not 500 so as far as the
credit bureaus know from the information
that they receive on my closing date my
ten dollar statement balance on a one
thousand dollar limit is only a one
percent credit utilization and that
looks like i'm being way more
responsible with the credit that i've
been given now i usually don't get this
exact with pre-paying my credit cards
because now at this stage in my credit
journey my credit limits are much higher
than just 1 000 which gives me a lot
more room to spend without having to
worry that much about what my
utilization is but as a beginner the
challenge is that you usually get
started with a low credit limit whether
that's a limit on a secured or unsecured
card so maybe you only have a secured
credit card as your first card right now
and you had to put down a 250 deposit to
get a 250 credit limit to start off that
doesn't give you much room for spending
a lot when thinking about that card's
credit utilization so the best way to
use a secured card or any card with a
low credit limit in a scenario like this
would be to either use that only for a
small purchase of a few dollars each
month and then pay it off after the
statement closes but before the payment
due date or if you spend maybe a hundred
dollars on something you could make a 95
payment partially pay down that balance
before the statement closing date that
way a much smaller credit utilization
gets reported which looks good for your
credit score early on as a beginner so
with credit utilization just be aware of
how that's calculated what your balance
is what your credit limit is and what
your statement closing date will be
because then you can manage what
utilization gets reported to boost your
credit score all right now finally for
the fifth lesson in this video we're
gonna move over to payment history which
is that other factor of your credit
score that's so important and that
lesson is to never miss a credit card
payment now actually payment history is
slightly more important for your credit
score than credit utilization since
payment history makes up about 35 of
your fico score and utilization makes up
about 30 basically payment history is
important because future lenders looking
at your credit report want to make sure
that you have a strong history of paying
back things that you owe and credit
utilization is important because future
lenders want to make sure that you're
not being too risky and using too much
of the credit that you've been given now
luckily payment history is more
straightforward to understand but
there's still some hidden things to know
that can help you to stay ahead of your
credit cards as a beginner so back to
your credit card statement i explained
earlier in this video that there's going
to be a payment due date that's
typically 21 days after your statement
closing date the simple thing that you
have to do to positively impact your
credit score with payment history is
just remember to pay at least the
minimum payment by the payment due date
for it to be considered on time now
again the minimum payment is the bare
minimum so i do not recommend paying
only that amount you should pay the full
statement balance by that payment due
date to avoid carrying a balance and
paying interest but when you have a
perfect 100 record of on-time payments
that's the best outcome for payment
history on that portion of your credit
score now with each payment that you
actually miss you'll start to see
negative impacts to your score and even
just a couple of late payments can be a
bad thing since those are gonna stay on
your credit report for about seven years
a missed payment is also probably going
to get you hit with a late fee of maybe
30 to 40 but if you realize that you
missed that payment within about 30 days
of your payment due date the credit card
issuer is likely not going to report
that to the credit bureaus just yet to
hurt your credit score so just make sure
to pay the payment as soon as possible
and you should be fine also if you want
to make sure that missing a credit card
payment never happens so that your
payment history can remain perfect
there's a few things that i like to
recommend that people do first you can
set up automatic payments on your credit
card account so that your statement
balance gets automatically paid on or
before the payment due date each month
now there are two small downsides to
this with number one being that if you
don't have the money linked in your bank
account already then the automatic
payment is either going to get rejected
or you could overdraft on your bank
account and have to pay some fees from
that so if you do set up payments like
this then make sure that you always have
enough cash in your bank account but
downside number two is that automatic
payments could lead you to having less
oversight over your credit card account
which could cause you to either
overspend on your credit cards or it
could cause you to miss charges that
aren't supposed to be there that's why
personally i just like to set reminders
on my phone to check my credit card
accounts on a regular basis a few times
a month that way i make sure that i'm on
top of everything automatic payments can
be a good backup plan but in my opinion
having visibility over your accounts is
also very important so just find a
system that works for you that way you
don't miss any payments and once again
pay off those statement balances on time
and in full each month i know that keeps
saying that but it is something to
always remember now since this video was
really focused on credit cards for
beginners next you'll also want to check
out this video over here on common
credit card mistakes to avoid or this
one over here that i mentioned earlier
about when to pay your credit card bill
but as always thank you so much for
watching i hope you have a great day and
i'll see you in the next one