Financial Foundations #4: Building Credit and Utilizing Credit Cards

October 5, 2023

The following article may contain affiliate links or sponsored content. This doesn't cost you anything, and shopping or using our affiliate partners is a way to support our mission. I will never work with a brand or showcase a product that I don't personally use or believe in.

The following article may contain affiliate links or sponsored content. This doesn’t cost you anything, and shopping or using our affiliate partners is a way to support our mission. I will never work with a brand or showcase a product that I don’t personally use or believe in.

Credit-building hacks and credit hygiene 

Welcome to Financial Foundations, a mini-series of Financial Feminist, brought to you by State Farm. During each episode of this limited series, we’ll be tackling financial basics like budgeting, investing, debt, and what it really means to be a Financial Feminist to help you get on track no matter where you’re at with your money journey. Through short, actionable episodes and simple homework exercises, I’ll help you build a financial plan you’ll actually want to stick to. Thanks again to our sponsor, State Farm, for making this series possible. Like a good neighbor, State Farm is there.

Credit cards have gotten a bad rap due to their easy misuse and the lack of knowledge about credit card best practices. We’re constantly bombarded with opposing views of whether credit cards are good or bad. But what’s true? 

In this episode of Financial Foundations, brought to you by State Farm, Tori’s talking about one of the most important credit-building tools — credit cards. She will share how to effectively use credit not just to build a healthy credit score, but how to take advantage of perks and security measures associated with credit cards. 

You’ll also learn:

  • How to use credit cards the right way

  • What makes up your credit score

  • Why you should use a credit card, not a debit card 

  • How to choose your first credit card

  • Whether or not annual fees are worth it

  • How to use credit cards to get free stuff

  • Common credit mistakes and myths 

Some questions to ponder from this episode:

  • What are your own views on credit cards?

  • What or who has helped shape that view?


  1. Journal about what you think investing is –– any and everything you think you know about it, and also write down how confident you feel about managing your own investments. Bring it back with you next time!

  1. Spend some time on our tools page, to learn more about our credit resources.


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Tori Dunlap:

Welcome to Financial Foundations, a miniseries of Financial Feminist brought to you by State Farm. During each episode of this limited series, we’ll be tackling financial basics, like budgeting, investing, debt, and what it really means to be a Financial Feminist, to help you get on track no matter where you’re at on your money journey. Through short, actionable episodes and simple homework exercises, I’ll help you build a financial plan you’ll actually want to stick to. Thanks again to our sponsor, State Farm, for making the series possible. Like a good neighbor, State Farm is there.

Hi, Financial Feminist. Welcome back to another episode of Financial Foundations, brought to you by our friends at State Farm. This is episode four. Welcome to episode four. So if you haven’t caught up on episodes one through three, do yourself a favor, go ahead back to the previous episodes and make sure you’ve done some of the homework and the prep for this episode. We are doing them in chronological order. The rest of Financial Feminist is a choose your own adventure. This is not a choose your own adventure. This is a, “Hello, this is a fun adventure, but we’re telling you exactly where to go.” This is a Monopoly board, you know exactly where you’re going, baby. So if you haven’t listened to episodes one through three, go listen to those. Those are the precursors for episode four in order for you to get the most bang for your buck, no pun intended.

All right, let’s talk about debt. In episode three, we talked about debt, getting out of it, but also how debt can be helpful and how it’s inevitable that you will have to interact with parts of debt at some point, especially if you’re hoping to build credit, hoping to progress financially, hoping to literally just level up in your life, right? As we mentioned in the previous episode, the average person has to take on debt at some point in their life. Maybe that’s debt to get a bachelor’s degree, maybe that’s debt to get a car, or to buy a house, or to get a master’s degree, or to start a business. So if you have debt, it’s not a bad thing, but there are ways to pay it off, right? So we talked about that previous episode.

In today’s episode, we are diving into one of the most popular credit building tools, credit cards. Yes, credit cards. We’re going to talk about how you can effectively use credit cards, not to just build a healthy credit score, but also get free shit. We love free shit. How to take advantage of perks and even security measures associated with credit cards.

Now, first of all, credit cards sometimes get a bad rep by folks like Dave Ramsey. You are told that credit cards are terrible, that you shouldn’t use them, and that they’re a slippery slope. Here’s the deal. One, yes, they are a slippery slope, but they’re also great tools. I mentioned in my book Financial Feminist that credit cards are just like any other tool, like a knife. Yes, a knife can cut you if used wrong, right? If you slip and you make a mistake, your knife can cut you, a hundred percent. But your knife can also chop up veggies for you and make a delicious veggie stir-fry, right? Credit cards are just that, they’re tools, and we need to make sure to use them responsibly.

Responsibly means that you are paying off your balance on time and in full. What does that mean? If you put a thousand dollars on a credit card and your credit card statement is due on the 15th of every month, that means you are sending a thousand dollars by the 15th of the month. You are not sending in $750, you’re not sending $200, you’re also not sending it in on the 17th or the 20th. You are sending it in on the day it’s due or before the day it’s due and in the full amount.

What happens if we don’t? If we don’t, one, you might get charged late fees because you’re turning your bill in late, and if you don’t pay your full bill, if you don’t pay your full balance, even when your credit card company says, “Oh, you can pay $200 even if you put a thousand dollars on.” If you only pay $200, they are then going to charge you interest, and that puts you in credit card debt.

So it’s okay if you’re not ready to get a credit card right now. That is okay. I personally got my first credit card when I was 18 because I knew how to use it responsibly. I had parents to teach me. Responsible credit use, meaning you’re paying your bills on time and in full, is one of the easiest ways to boost your credit score as well as to get free perks.

Let’s do a brief breakdown of credit factors and why this is important. What makes up a credit score? First, credit scores are defined as what I lovingly call your adult GPA. It’s the measure of how responsible you are with money. Now, is the credit system kind of BS? Yes. Is it the best tool we have for actually leveling up our lives and leveling up our money? Yeah, it’s one of the best. Your credit score is a good way for potential lenders, the people you’re asking to give you money, to determine if you are going to pay that back. So if you have a lower credit score, you’re a higher risk to them because they’re giving you their money and they want to know they’re going to get it back. A higher credit score typically means that you are proving to them that you will pay that back or you’re more likely to pay that back, so you’re probably more likely to get that loan. You’re also probably more likely to get a lower interest rate on that loan.

What makes up a credit score? First is the length of credit. Simply put, it’s how long you’ve had credit for. The second factor is how many times have you asked for a loan, basically. We call these credit inquiries. What happens is if I’m going to go buy a car, the car company is pulling my credit, doing an inquiry to determine what my actual score is and whether I am going to be able to purchase this car. And if you are out here balling out and buying a car every other month or applying for a credit card a couple times a year all the time, it may look like you’re financially irresponsible, right? Because you’re just trying to get to get a bunch of people to give you a bunch of money. And finally, revolving balances is one of
the things that contributes to your credit, which is where is your credit being used and how much credit is being used, right? Do I have a lot of student debt? Do I have a lot of credit card debt? Do I have a lot of debt in a lot of places?

One of the most important things that we’ve also discussed on previous episodes of this show and in my book Financial Feminist is also called your credit utilization rate. Your credit utilization rate is the percentage of credit you’re using. If you have a credit card with a $10,000 credit limit and you put $7,000 of purchases on that credit card, for that piece of credit, your credit utilization rate is 70%. One of the easiest ways to boost your credit score is by lowering that utilization rate, either by spending less or spending the same amount but asking for a credit line increase. We want to be ideally under 30%, and under 10% is amazing and will likely work wonders in boosting your credit score. More information about how to ask for this credit line increase as well as how to get it, both in my book and on previous episodes of the show.

All right. I don’t have a debit card. I have discussed this in episodes before. This shocks a lot of people when they discover it. I have a debit card that I put in my junk drawer. I don’t use it. It’s not something I use on a day-to-day basis. It’s not even in my wallet. I’ve never actually used a debit card. The reason I don’t use one, there’s a lot of reasons. The first is that I just treat my credit card like a debit card. I don’t put anything on my credit card that I couldn’t afford, that I couldn’t afford to pay on time and in full. I treat my credit card like a debit card. If I don’t have the money, I don’t buy it. So that’s the first thing.

Second thing is that debit cards are not as secure as credit cards. If somebody figures out my pin, they have a direct access to my bank account and could hypothetically take out some, if not all of my money. Credit cards, if there is a fraudulent transaction, if there’s a double charge, if something happens, literally, that is a two-step process through my credit card company’s website. That is a two-step process to get that flagged and removed.

And I love getting free shit. I think we all like getting free stuff. I have talked again on the show before about how this summer, my partner and I flew to Europe in lie-down-flat seats completely on credit card points, and for half of our three-week trip to Europe, I use credit card points for hotels. I got about $15,000, maybe more than that, $20,000 of free travel this year just using my credit card points. I flew to New Zealand last year with Christine, used my points. I get TSA precheck, I get clear when I go through the airports, I get lounge access at the airport, and let me tell you, there is nothing that makes you feel like John Mulaney like, “This is the height of luxury.” There is nothing better than an airport lounge truly to make you feel just fancy, just fancy and lovely.

I get travel credit, I get free subscriptions to things. I ordered poke on DoorDash last night, and my DoorDash, what is it, plus? What is their subscription? I don’t know. That’s free. So there are so many perks and benefits and points to using credit cards, and if you use them responsibly, which you have to use them responsibly, let me be clear, you can use it exactly like a debit card. That’s what I do, that’s what I learned from my parents, that’s what I’ve done my entire life, and I am rolling in free stuff, and we love it, we love to see it.

How do I choose a first credit card? Maybe I am in my late-teens, maybe I’m in my early-twenties, maybe I just haven’t had a credit card and I am not that young anymore. How do I choose a good first one? There are student-based credit cards. This is the first one I ever got. I got a Discover Card. I still have it. It looks like a cassette tape. I love it. It was my favorite. I loved it. That was the only credit card I could get when I was 18 because I didn’t have credit and because I was still pretty young, I was just starting to build my credit. So there are student cards that you can get access to.

There are also secured credit cards. If you are a person who has not had a good relationship with credit cards in the past, there are these kind of hybrid cards between a debit card and a credit card that can help you build credit, but they act more like a debit card.

You also, depending on how old you are, depending on your credit score, you might qualify for one of these more traditional cards. A good general card, if you’re wondering what credit card to get, is just a general cashback card. That is a great first or like second credit card, and if you’re feeling overwhelmed by the options, look for the one that gives you cashback on everything. You’re looking for like a one-and-a-half percent cashback.

All of these that I just mentioned, student credit cards as well as the general cashback card, we have our recommendations linked on our website. You can go to to see what we recommend. You can also see the travel cards I use to get my free travel rewards.

All right. How do we use a credit card without going into debt? Like I said before, we only buy what we can afford, meaning if I couldn’t pay for it in cash, I don’t put it on the credit card. I only buy what I can afford, and I pay it off in full every month. I don’t just do the minimum balance payment. I do the full payment, which means, again, if I put a thousand dollars on a credit card, I am paying a thousand dollars.

Let’s talk about some intermediate credit card hacks. One, you might be asking yourself if you know a little bit more about credit cards, is an annual fee worth it? We see this with these bigger credit cards, again, these travel rewards credit cards that sometimes they’re charging you anywhere from like $75 to 600, $700 for an annual fee. I want to debunk this hard. People think annual fees are bad. If you use the card and get all of the perks and the benefits of the card, annual fees are not necessarily a bad thing. I have a travel credit card that is nearly a $700 annual fee, yet I get literally hundreds of dollars in perks and benefits to the point where literally at the end of the year, it adds up to way more than the annual fee. So you just have to figure out if it’s worth it for you. It is a hundred percent worth it for me because I end up getting more perks and more benefits in terms of cost than what I’m paying in that annual fee.

So just because a card has an annual fee, don’t necessarily scoff at it or don’t look at it if you know you would get a lot of benefit from it. However, again, if you’re confused about what credit card to get, and this is like one of your first credit cards, just a general cashback card with no annual fee is going to be great. We also have, again, linked on our website.

Let’s talk about points versus cashback, right? I mentioned cashback, which is just literally, if it’s 1.5% cashback on everything, it’s exactly what it sounds like. You’re getting a percent and a half on every single purchase you make. Points, on the other hand, typically accrue at $1 equals one point, and then sometimes you might have categories that earn you more points, like 5X points on dining or 5X points on travel, and then those points can be redeemed either for statement credit, like cashback, or like I said before, what I did is I transferred them to Air France and then flew to Paris for free. So points are more flexible because they can be used for more things. They can be u
sed for travel, like flights, hotels, rental cars. They can be used for, again, cashback on your statement, they can be used for gift cards. They have a lot more flexibility, but it also takes slightly more work because you have to figure out how to redeem them and how to redeem them in a way that’s going to be financially beneficial.

I also want to say that one of my favorite hacks is if you do have multiple credit cards, open them up with the same bank or the same institution. For example, if you have a Chase travel card that gives you points, like me, you can open up a second Chase card if you would like, as opposed to opening up at a different bank, so then you can pool your points. So I have both a personal and a business card both through Chase, and that way, I can pool points so I can get more free shit. So that’s another helpful hack, is rather than potentially open up a bunch of credit cards at a bunch of financial institutions, if you can consolidate and think strategically about where you open them up, that will probably be better for you.

A couple common myths or mistakes that we see when it comes to handling credit cards. One, I need you to know that you are not building credit if you are an authorized user. If you are an authorized user on a parent’s card or, what happens all the time, a spouse’s card, you’re not building your own credit, you are building their credit. Again, we’ve discussed this before on previous episodes, but if you are a woman typically married to a man, that man is getting all of the benefits of your smart decision-making and you are getting none of them, and if you try to apply for something like your own credit card or your own apartment but you don’t have credit, you’ve been building somebody else’s, that’s not going to be great for you. So rather than being an authorized user, you can co-own credit cards. You can both be users on the cards rather than you being on the account but being an authorized user.

Two, one of the myths we hear all the time is that you need to keep a balance on your credit card to boost your credit score. That is not true. We’ve debunked that many a time. That just puts you in debt. You don’t need to maintain a balance and you should not maintain a balance on your credit cards unless it’s an absolute necessity for you, which is, again, why we’ve talked about in previous episodes the importance of saving that emergency fund first.

And finally, opening up several credit cards in a row is also not going to be great for you. Opening up a lot of credit cards in a short period of time is not going to do very much good to your credit score. It most likely will lower it.

And store credit cards are also this other mistake and this temptation because employees are literally told to push these cards. I have a section in chapter four of my book where I interviewed a former employee at Victoria’s Secret, and Victoria’s Secret literally, like pretty much every other retail company, gives employees a bonus if they get people to sign up for their credit cards. Now, if you sign up for a credit card at a store and you have thought through that purchase and you know you’re going to use it responsibly, great. Please note, however, that they are typically not worth it because that interest rate is way higher. Retail credit cards typically have a way higher interest rate and way less perks and benefits. I personally stay away from them. It might be a good idea for you as well.

Okay, let’s wrap up with some homework. One, I need you to go on over to our tools page and check out some of our favorite credit cards and our credit card resources. Again, you can go to We have the ones that I use and recommend that are actually in my wallet. So head on over to that page and do a little snooping.

Number two, I need you to check your current accounts. I need you to check what the interest rate is on these accounts, if you are carrying a balance, and if you can pay off that balance in full. As a reminder, again, month to month, we don’t want to carry the balance over. We don’t want to carry the balance through the due date. So if you are currently carrying a balance past the day it was due, you are in credit card debt, you are paying interest. So do everything you can to avoid that in the future and try to pay it off. We talked in the previous episode about strategies to paying off debt.

The next episode, we are going to discuss investing. Very exciting. A quick homework piece for the next episode, I want you to journal about what you think investing is, any and everything you know about it, and also write down how confident you feel about managing your own investments. Any sort of narratives you’ve been taught about investing, any sort of things you’ve been believing about investing or things that you think to be true about investing and how confident you feel managing your own investments, and then go ahead and bring it back with you for episode five.

Thank you so much for being here. Thank you for tuning in for our fourth episode of Financial Foundations, all about credit and credit cards and using them responsibly, and go travel to Europe for free. Can’t wait to see you there. I’ll see you in Paris. Bonjour. Okay, bye-bye.

A huge thanks to State Farm for supporting our mission here at Her First $100K and making the Financial Foundations series possible. Like a good neighbor, State Farm is there. Neither State Farm nor its agents give tax or legal advice.

Thank you for listening to Financial Feminist, a Her First $100K podcast. Financial Feminist is hosted by me, Tori Dunlap, produced by Kristen Fields, associate producer Tanisha Grant. Marketing and administration by Karina Patel, Sophia Cohen, Kahlil Dumas, Elizabeth McCumber, Beth Bowen, Amanda Leffew, Masha Bachmetyeva, Kailyn Sprinkle, Sumaya Mulla-Carillo, and Harvey Carlson. Research by Ariel Johnson, audio engineering by Alyssa Medcalf, promotional graphics by Mary Stratton, photography by Sarah Wolfe, and theme music by Jonah Cohen sound. A huge thanks to the entire Her First $100K team and community for supporting the show. For more information about Financial Feminist, Her First $100K, our guests, and episode show notes, visit


Tori Dunlap

Tori Dunlap is an internationally-recognized money and career expert. After saving $100,000 at age 25, Tori quit her corporate job in marketing and founded Her First $100K to fight financial inequality by giving women actionable resources to better their money. She has helped over one million women negotiate salary, pay off debt, build savings, and invest.

Tori’s work has been featured on Good Morning America, the New York Times, BBC, TIME, PEOPLE, CNN, New York Magazine, Forbes, CNBC, BuzzFeed, and more.

With a dedicated following of almost 250,000 on Instagram and more than 1.6 million on TikTok —and multiple instances of her story going viral—Tori’s unique take on financial advice has made her the go-to voice for ambitious millennial women. CNBC called Tori “the voice of financial confidence for women.”

An honors graduate of the University of Portland, Tori currently lives in Seattle, where she enjoys eating fried chicken, going to barre classes, and attempting to naturally work John Mulaney bits into conversation.

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