Some people say “cash is king,” but carrying a lot of cash can be inconvenient and risky. A credit card is often safer and easier to carry. Plus, it can give you access to more money than will easily fit in your wallet. Having a credit card can also help you learn to use credit responsibly. By doing so, you can help build and boost your credit score, which will make it easier to achieve big future goals like buying a house.
Getting your first credit card is a big responsibility, but it’s one we know you can handle. Just keep these do’s and don’ts in mind and you’ll be a credit card veteran in no time.
Don’t: Spend Too Close to Your Limit
When you get a credit card, you’ll be approved for a line of credit that lets you spend up to a certain amount. It can be tempting to spend all the way up to the limit, just because you can. But maxing out your card is a bad idea.
For one thing, the limit might be more than you can afford to pay back, which could leave you with costly interest charges. Getting too close to your limit also negatively affects your credit score. Experts suggest using no more than 30% of your available credit in order to maintain a healthy credit score. That means if you’re approved for $500, you should keep your balance under $150. If you’re approved for $1,000 you should keep your balance under $300.
Do: Have a Budget
A budget helps you understand how much money you’re earning and how much you can afford to spend. Everyone should have a budget. But once you have a credit card, and are able to spend more money more easily, creating one is especially important so you don’t have to rely on your credit card to cover your day-to-day expenses.
Don’t: Miss Payments
Your credit card bill will be due on the same day each month. Paying it on time shows creditors that you are responsible, and it can raise your credit score. Missing payments can lower your score and add costly interest charges and late fees to your balance.
Life is busy, and it’s easy to forget to pay your bill. Setting a reminder on your phone is a good way to avoid missing a payment. Setting up automatic payments from your checking account is even better.
Do: Pay off Your Entire Balance
Some people make only the minimum required payment on their credit cards each month. But if you do that, your interest payments will start to add up quickly—you could even end up spending more on interest that on the items you bought!
To avoid this situation, pay off your entire balance each month. If you can’t afford to pay all of it, pay off as much as you can, and then pay the rest of it off as soon as possible.
Don’t: Miss Out on Rewards
Credit cards can be rewarding when used responsibly—and not just for the convenience they offer! Some cards have rewards programs that let you earn cash back or points that you can redeem at stores or online. Before you apply for a credit card, learn whether it offers rewards and how they work.
At USE Credit Union, members earn points on all of their everyday credit card purchases. Those points can be redeemed for gift cards, travel, and more.
Finding the Right Credit Card
Whether you’re looking for convenience, security, spending power, rewards, a higher credit score, or all of the above, USE Credit Union can offer a credit card that’s right for you. Our Credit Builder and Savings Secured Credit cards help members establish, strengthen, and rebuild their credit and improve their financial health with competitive fixed rates, no balance transfer or cash advance fees, and a great rewards program.