How do I use a previously entered iTunes card to make purchases on iTunes instead of my credit card?

If the iTunes card was previously redeemed the balance will show up in iTunes to be used automatically as long as it can cover the cost of whatever is being purchased.

See your iTunes credit balance - Apple Support

If the card balance has been depleted or is not enough to cover the cost of the item, it will us the credit card to cover whatever the gift card balance cannot.

you can view your iTunes card balance on an iPhone at the bottom of any of the category tabs in the iTunes or App Store Apps.

There are also some items for which gift card balance cannot be used such as the purchase of gift cards.

Limnos wrote:

There are also some items for which gift card balance cannot be used such as the purchase of gift cards.

Very true, forgot about that. Thanks.

I have the icloud storage, why does that not use my itunes credit 1st instead of charging to my credit card?

It should in fact attempt to use the iTunes Credit balance to pay for iCloud Storage before attempting to use the credit card.

Unless the credit card has not been verified, or is no longer valid, in which case it will need to verify the card again before it can move on with the charge from the iTunes Credit balance.

iCloud storage plans and pricing - Apple Support

Accepted payment methods for iCloud storage upgrades include credit cards, debit cards, and iTunes Store credit. If you don't have enough iTunes store credit to complete your upgrade, you'll be charged the remaining amount. Apple Store gift cards aren't accepted as payment for upgrading iCloud storage. Learn how to manage the amount of storage you're using.

Change or remove your Apple ID payment information - Apple Support