This is a guest post from Beverly Harzog, who writes about credit cards and personal finance at Card Ratings. Harzog is the co-author of The Complete Idiot’s Guide to Person-to-Person Lending.

When I was in my early twenties, I was a credit card mess. I’d go shopping with my credit card in hand and not worry about how much I spent until the bill came. At that point, though, I’d start worrying a great deal — sometimes, I’d worry about it all night!

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It didn’t take long for me to realize that I had to change my evil spending ways or cut up my card. So, I spent a lot of time learning everything I could about credit cards and personal finance. Use credit or cash, whichever works best for you; but if you do use credit, use it effectively.I literally read everything I could get my hands on. The more I learned, the easier it became to have a relationship with my credit card that it didn’t involve sleepless nights.

Fast forward a couple of decades. Now, I spend the better part of every day either writing or talking about credit cards or personal finance. But I freely acknowledge that credit cards aren’t for everyone. Cash is king for many people. But for those who do want a mutually beneficial relationship with their credit cards, here are the five habits common among cardholders who use their cards effectively.

Habit #1: They have an organized credit life.
You need to check your credit report and FICO score regularly. On, you can get a free credit report from each bureau (Equifax, TransUnion, and Experian) once a year. Instead of ordering them all at once, request a report from a different credit bureau every four months. This way, you can monitor your report throughout the year. When you read the report, look for errors and signs of identity theft. (Here’s Adam Baker’s step-by-step guide to how to get your free credit report from

Know what your credit card balances are on each of your cards. Also keep tabs on the interest rates for your cards. Check your accounts online several times a week so you stay on top of your balances. I know it’s a high-tech world, but it’s a good idea to keep files that have your credit report, score, monthly credit card bills, and disclosure statements. Nothing fancy required. Manila folders work just fine.

Habit #2: They Pay Their Bills in Full Every Month
One reason you want to have an organized credit life is so you always know where you stand with credit card balances. The goal is to pay off the balance every month. There’s really no middle ground here. You have to have the self-discipline to stop spending when you reach your budgeted limit. If your past history suggests that you will keep spending, don’t use credit cards.

And give yourself a pat on the back for honesty. The people who are the most successful at managing their money are the ones who know their strengths and weaknesses and make decisions accordingly.

Habit #3: They Use Rewards Cards to Their Advantage
I admit I love a good rewards card.I guess it’s the personal finance geek inside me who loves the idea of getting paid to use my credit card. The key here is to use the rewards card to your advantage and that means paying off your bill in full every month (see Habit #2). Rewards cards tend to have higher interest rates. If you carry a balance, you not only negate the benefit, you lose money.

Habit #4: They Track Their Credit Card Expenses
When I had sleepless nights over credit card bills it was because I wasn’t tracking my expenses. So when my statement arrived, I almost passed out from anxiety. If you’re an effective credit card user — make that a highly effective user — you’re never surprised by your bill. And since you’re paying the bill off every month, it’s just another piece of mail.

There are a lot of fun money management tools out there right now. You just have to do some research and find one that works for you. I use Mint and it’s worked well for me. I’m a visual person, and I love all the colorful charts and graphs.

Habit #5: They Read Their Credit Card Bills and Disclosure Statements
Open your statement as soon as it arrives. Look at every transaction to make sure the charges are legitimate. If you see any discrepancies, get on the phone immediately. It’s very important right now to read all the disclosure statements you receive. With the credit card legislation still being phased in, credit card issuers are sometimes getting creative when it comes to fees.

Disclaimer: This content is not provided by any company mentioned in this article. Any opinions, analyses, reviews or recommendations expressed here are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any such company.