Cursor is a new coding IDE (integrated development environment) that comes with predictive text and built in AI functionality. It’s very similar to Claude Code, but is native to the Cursor AI development environment.
With the built-in AI functionality, you can ask an agent to plan and then develop what it has planned. You can even ask it questions about a code base as well as get it to write the documentation for you.
As an AI engineer and the founder of AIMEC, I have been able to increase my output by 150% using Cursor and its built-in AI functionality. In this guide, I will show you how.
What Is Cursor AI?
Cursor AI is an AI-native code editor designed to fundamentally change how developers interact with their codebase. Built as a fork of Visual Studio Code (VS Code), it maintains a familiar interface while deeply integrating large language models directly into the development workflow.
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Unlike traditional editors that rely on external plugins, Cursor is “codebase-aware,” meaning it indexes your local files to provide contextually relevant answers, bug fixes, and code generation that understands the specific logic of your entire project.
Core Capabilities and Workflow
The editor excels at reducing the “cognitive load” of programming through features like Composer, which allows users to describe complex multi-file changes in natural language that the AI then executes simultaneously. It offers a “Tab” feature for powerful autocomplete that predicts your next several lines of code, and a chat interface where you can ask high-level architectural questions or request specific refactors. By combining the extensibility of the VS Code ecosystem with a purpose-built AI core, Cursor enables both seasoned engineers and newcomers to build applications faster by shifting the focus from syntax to intent.
Who Invented Cursor AI?
Cursor was created by Anysphere, a startup founded in 2022 by four MIT graduates: Michael Truell (CEO), Sualeh Asif, Arvid Lunnemark, and Aman Sanger. The team originally met as students and shared a deep interest in how scaling laws in AI would eventually transform software engineering. Before settling on the code editor, the founders explored several other AI-driven concepts—including a “co-pilot” for mechanical engineers and a secure messaging system—before pivoting to solve the frustrations they faced personally as developers.
The decision to fork VS Code rather than build a new editor from scratch was a pivotal strategic move by the founders. It allowed them to bypass years of UI development and focus entirely on “native” AI integration, such as project-wide indexing and low-latency model performance. This focus has led to rapid growth, with the company attracting significant investment from major industry players like OpenAI, Andreessen Horowitz, and Jeff Dean, ultimately positioning Cursor as a primary competitor to established tools like GitHub Copilot.
How I Use Cursor AI To Increase My Productivity as a Coder
As a software and AI developer, I spend most of the time looking at endless lines of code. Before, I would have to keep a mental picture of each file and how it plugs into the broader application. In addition, I’d have to manually debug the code as well.
With Cursor AI, my time spent on code has gone from weeks and sometimes months, to days and even hours on frequent occasions. Just in the past couple of weeks, I have been able to develop micro-services and smaller applications from scratch, compile the documentation, and configure the docker container for the code in less than a work day using Cursor AI.
For bigger applications, the development from the ground up usually takes a maximum of 5 days.
I am able to do that because Cursor’s built-in AI enables me to develop a plan a lot quicker, write all of the code, answer my questions on the newly-created code, and document everything so fast.
Below is the process I use to push out code at such high speeds.
Step 1
The first step in my process is the planning stage. This is the most important phase in the development cycle in my opinion. So, this part of the development takes the longest. However, Cursor’s AI speeds up this process significantly.
To get Cursor AI to help you plan, simply navigate to the AI chat window in your IDE. It’s show as the “AI Sidebar” in the picture below.
Cursor IDE window (Source: Cursor)
At the top of the AI sidebar, you’ll see the actual chat window. At the bottom left corner where it says “Agent” there’s a drop down. Click on this dropdown and select “Plan.” Once done, your Cursor AI will be put in planning mode, and won’t make any changes to your files or code.
Another tip: Change the model to “Auto,” this is much cheaper than all of the other options on offer from Cursor. It’s also cheaper than integrating with third-party models.
With those settings in place, you can now tell the AI what you want the application to be. Try to give as much of a high level overview as possible. Also refrain from using words like “please” and “thank you” when chatting with the AI, because these are somewhat unnecessary words that take up tokens and costs.
Once you submit the requirements to the AI, it will start building a plan. When done, it will create a new file with the plan that you can then read over and edit. If there are certain things in the plan that you are not happy with, tell the AI in the same chat. Try to give all of the change requests in one go. I have found this approach delivers better results when making changes to a generated plan.
Step 2
Once you’re happy with the plan, the next step is to get the agent to code what has been brainstormed. To do this, all you have to do is click on “Plan” in the AI chat and switch it to “Agent.”
After switching to “Agent” mode, you can then just tell the agent to code out the plan that it created. Remember to make sure that the AI model that is selected is “Auto.” All you need to do then is just click the send button.
Make sure to keep an eye on the agent chat window while the AI codes, it might ask you to approve commands that it wants to execute in the terminal.
Step 3
Once the Cursor AI has finished writing the code, you can then go over all of the software that was written. During this stage, it’s easy to get confused or even overwhelmed by the amount of software that was written.
I sometimes find myself lost when trying to go over all of the code that was written by the agent so quickly. To get a quick idea of what the AI has coded and to get a quick idea of if the agent has written the software according to plan, I like to switch the AI back to “Plan” mode and ask it to give a high-level visual diagram of the flow of the code. This way, I can quickly see if something went wrong.
If everything checks out with the visual overview, the next best thing to do is switch the agent chat to “Ask.” After doing this, you can then query the agent and ask any questions you may have about the code.
Note: The approach above may take some extra API calls, and subsequently cost a bit more. However, the cost in my opinion is worth it when you look at how quickly you can go from idea, to code, to review.
Cursor AI Pricing
Cursor AI uses a tiered subscription model, with plans designed for different levels of usage—from casual experimentation to heavy, agent-driven development workflows.
At the entry level, the Hobby plan is free, offering limited access to features like AI agent requests and code completions. For most working developers, the Pro plan costs $20 per month, while higher tiers such as Pro+ ($60/month) and Ultra ($200/month) are designed for users who rely heavily on advanced AI models and automation throughout their workflow.
Cursor AI pricing and plans (Source: Cursor)
The key shift in Cursor’s pricing model is that it is now credit-based rather than purely subscription-based.
Each paid plan includes a monthly pool of usage credits—typically equal to the subscription price (for example, $20 in credits on the $20 Pro plan). These credits are consumed when you manually use premium AI models like GPT-4, Claude, or Gemini for more complex tasks. Meanwhile, features such as autocomplete (“Tab”) and Auto mode—where Cursor selects the model for you—are generally unlimited and do not draw from your credit balance.
Tracking Usage
Cursor provides built-in tools to monitor how much of your monthly credit pool you’ve used. Within the dashboard or billing interface, you can track consumption in real time and see how different actions—such as running agents or selecting specific models—impact their balance.
For teams, the platform also includes usage analytics and reporting tools, making it easier to manage costs across multiple developers.
In practice, staying within your monthly allocation often comes down to how you use the platform. Developers who rely mostly on Auto mode may rarely touch their credit pool, while those who manually select high-end models for every task can burn through credits quickly.
Monitoring usage regularly helps prevent unexpected overages and allows you to adjust behavior or upgrade plans if needed.
What Happens If You Go Over Your Monthly Package?
If you exceed your included monthly credits, Cursor does not immediately stop working. Instead, you typically have a few options. You can switch back to Auto mode (which remains unlimited), upgrade to a higher-tier plan with more included credits, or enable pay-as-you-go billing to continue using premium models without interruption.
Additionally, Cursor allows users to set spending limits, giving you control over how much extra you are willing to pay beyond your subscription. In some cases, there may also be a short grace period after your credits are exhausted before stricter limits apply.
Overall, Cursor AI’s pricing is straightforward at the surface—ranging from free to $200 per month—but the real cost depends on how intensively you use premium AI models.
To get started using Cursor AI, head over to this link and create an account.
Cursor AI Alternatives
When looking for alternatives to Cursor AI, it’s important to understand that the market has split into two main categories: AI-native IDEs (like Cursor) and AI assistants that plug into existing IDEs. Each alternative takes a slightly different approach to helping developers write, refactor, and understand code, which means the “best” option depends heavily on your workflow.
One of the most widely used alternatives is GitHub Copilot. Unlike Cursor, which replaces your editor, Copilot integrates directly into tools like VS Code and JetBrains IDEs. It focuses on inline code suggestions and autocomplete, making it ideal for developers who want to enhance their existing workflow without switching environments.
Codeium is another strong competitor, especially for budget-conscious users, offering a generous free tier with solid autocomplete and multi-IDE support. Meanwhile, Tabnine targets enterprise users with a strong emphasis on privacy and local model deployment, making it appealing for companies handling sensitive code.
There are also more specialized tools like Amazon Q Developer, which is optimized for AWS-heavy workflows, and Cody, which excels at navigating and understanding very large codebases.
For developers working in cloud-based environments, Replit Ghostwriter provides an integrated AI coding experience directly in the browser.
Comparison of Cursor AI vs Alternatives
| Feature / Tool | Cursor AI | GitHub Copilot | Codeium | Tabnine |
| Core Approach | AI-native IDE | Plugin for existing IDEs | Plugin for IDEs | Plugin + local models |
| Best Use Case | Complex, multi-file projects | Everyday coding & autocomplete | Free alternative & flexibility | Privacy-focused teams |
| Codebase Understanding | Strong (full repo context) | Moderate | Moderate | Moderate |
| Pricing | Paid (credit-based) | Subscription ($10–$19/mo) | Free + paid tier | Paid tiers |
| IDE Support | Cursor only | Multiple IDEs | 40+ IDEs | Most IDEs |
| Strength | Deep AI integration | Reliability & ecosystem | Cost-effective | Security & compliance |
The biggest difference comes down to philosophy.
Cursor is built as a full AI-first development environment, meaning it can analyze entire repositories and perform multi-file changes in one step. In contrast, tools like Copilot and Codeium are designed to augment your current workflow, offering suggestions without forcing you to change your editor.
In practice, that means Cursor tends to appeal more to advanced users working on large or complex systems, while alternatives like Copilot or Codeium are often better suited for teams that want incremental productivity gains with minimal disruption.
If cost is a concern, Codeium stands out, whereas Tabnine becomes the preferred choice in regulated or privacy-sensitive environments.
Overall, the alternatives to Cursor AI are not just replacements—they represent different philosophies of how AI should integrate into software development. The right choice depends less on features alone and more on whether you want AI to sit beside your workflow or completely redefine it.
Frequently Asked Questions
Can I use Cursor AI for free?
Yes, Cursor AI offers a free (Hobby) plan that allows users to try out its core features, including limited AI-powered coding assistance. However, advanced functionality—such as access to premium models and higher usage limits—requires a paid subscription.
Is Cursor AI better than ChatGPT?
Cursor AI and ChatGPT serve different purposes. Cursor is specifically designed as an AI-powered coding environment that can understand and edit entire codebases, while ChatGPT is a general-purpose AI assistant. For coding workflows, Cursor is often more efficient because it integrates directly into your development environment, but ChatGPT is more versatile for broader tasks like research, writing, and explanations.
What is Cursor AI used for?
Cursor AI is an AI-powered code editor used to help developers write, edit, debug, and understand code more efficiently. It can generate code from natural language prompts, refactor multiple files at once, and analyze entire repositories—making it especially useful for complex software projects.
Who is the CEO of Cursor?
The CEO of Cursor is Michael Truell, who is also a co-founder of the company behind Cursor, Anysphere.
