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Credit can be a scary word.
It shouldn’t be. When managed well, credit can be a powerful tool for achieving your financial goals.
Whether you're dreaming of buying your first home, saving for a vacation or simply building a strong financial foundation, understanding how to use credit wisely can transform your entire approach to money management. The key isn't avoiding credit entirely — it's learning to make it work for you.
Let’s explore a few strategies for better credit management and make 2025 the year where you take control of your credit!
We recommend asking these questions:
Now that you have a better idea of how you used credit lines in 2024, look for recurring expenses or specific categories of spending you tend to charge on credit lines. Did you mostly use credit for emergencies? Or did you use credit lines to cover major expenses that you planned carefully?
It depends. The idea of starting the new year with a clean slate is tempting. However, the decision to pay off credit cards and loans should be based on your budget.
Can you afford to pay off your credit lines comfortably? If yes, paying off loans and cards early is a great way to save on interest and eliminate a recurring monthly expense. With the money you freed up, you can increase your contributions to your savings account or even look into investing!
If you feel that you can comfortably pay off a credit line, we recommend paying off the one with the highest interest first.
What if you can’t afford to pay off your entire credit balance? There are a few options to consider:
Typically, unsecured lines come with higher interest rates. The easier the line is to open, the more you’re likely to spend on fees and interest. As you reach financial milestones and improve your credit score, you can qualify for more affordable credit products and should consider balance transfers or credit consolidation.
If you feel that a lender is charging you too much in fees or interest, we recommend shopping around to compare alternatives. For instance, in Q3 2024, banks charged an average of 15.75% for credit card interest and 7.80% on 48-month loans on used cars. Credit unions charged an average of 12.90% and 6.34% in interest for these same products.
With a better credit profile, qualifying for credit lines with advantageous terms will become easier. Major credit products like mortgages, auto loans or recreational loans will also become more accessible, allowing you to take full advantage of credit to achieve financial milestones.
On a smaller scale, smart credit management can help you stick to a monthly budget. For instance, you can use a credit card to cover daily expenses and pay it off in full at the end of the month to track your expenses and manage your cash flow.
At Power Financial Credit Union, we believe in being proactive about managing your finances and leveraging credit to build a better future. We’d like to invite you to explore our credit cards. With perks like no annual fees, no balance transfer fees, rewards on all your purchases and low APRs, a PFCU credit card can be a powerful financial tool for 2025.
Credit can be a scary word.
It shouldn’t be. When managed well, credit can be a powerful tool for achieving your financial goals.
Whether you're dreaming of buying your first home, saving for a vacation or simply building a strong financial foundation, understanding how to use credit wisely can transform your entire approach to money management. The key isn't avoiding credit entirely — it's learning to make it work for you.
Let’s explore a few strategies for better credit management and make 2025 the year where you take control of your credit!
Start With a Credit Round-Up
The new year is an opportunity to start afresh. Before you can make plans for 2025, you need to gain more visibility into the role credit plays in your finances.We recommend asking these questions:
- How many credit cards and loans do you have?
- How much do you currently owe on these accounts?
- What are the interest rates on your different accounts?
- Are you paying for any additional fees, such as annual credit card fees?
- How much did you charge on your different credit lines throughout the year?
- What percentage of your monthly budget goes toward credit card and loan payments?
- How much did interest and other fees end up costing you in 2024?
Now that you have a better idea of how you used credit lines in 2024, look for recurring expenses or specific categories of spending you tend to charge on credit lines. Did you mostly use credit for emergencies? Or did you use credit lines to cover major expenses that you planned carefully?
Should You Pay Off Your Credit Cards?
It depends. The idea of starting the new year with a clean slate is tempting. However, the decision to pay off credit cards and loans should be based on your budget.Can you afford to pay off your credit lines comfortably? If yes, paying off loans and cards early is a great way to save on interest and eliminate a recurring monthly expense. With the money you freed up, you can increase your contributions to your savings account or even look into investing!
If you feel that you can comfortably pay off a credit line, we recommend paying off the one with the highest interest first.
What if you can’t afford to pay off your entire credit balance? There are a few options to consider:
- A balance transfer can be a good way to spend less on interest.
- You can also consolidate multiple credit lines into a single one to save on fees and make credit management easier.
- Refinancing your car loan or your mortgage is an option if you’re spending too much on interest.
Not All Credit Lines Are the Same
Is consolidating credit lines really worth it? An important part of credit management is learning to recognize different types of credit lines and understanding that lenders can offer vastly different terms for similar products.Typically, unsecured lines come with higher interest rates. The easier the line is to open, the more you’re likely to spend on fees and interest. As you reach financial milestones and improve your credit score, you can qualify for more affordable credit products and should consider balance transfers or credit consolidation.
If you feel that a lender is charging you too much in fees or interest, we recommend shopping around to compare alternatives. For instance, in Q3 2024, banks charged an average of 15.75% for credit card interest and 7.80% on 48-month loans on used cars. Credit unions charged an average of 12.90% and 6.34% in interest for these same products.
Leveraging Credit to Support Your Financial Goals
Paying off credit lines, consolidating credit cards and being more proactive about credit management will boost your credit score.With a better credit profile, qualifying for credit lines with advantageous terms will become easier. Major credit products like mortgages, auto loans or recreational loans will also become more accessible, allowing you to take full advantage of credit to achieve financial milestones.
On a smaller scale, smart credit management can help you stick to a monthly budget. For instance, you can use a credit card to cover daily expenses and pay it off in full at the end of the month to track your expenses and manage your cash flow.
Better Credit Management With Power Financial Credit Union
Whether you're working on paying down credit cards, shopping for better rates or using credit lines to finance major projects, every step you take toward better credit management brings you closer to your financial goals.At Power Financial Credit Union, we believe in being proactive about managing your finances and leveraging credit to build a better future. We’d like to invite you to explore our credit cards. With perks like no annual fees, no balance transfer fees, rewards on all your purchases and low APRs, a PFCU credit card can be a powerful financial tool for 2025.