Is a Credit Card Right for You? How to Use It Without Falling Into Debt

4 MIN. READ

 

Key takeaways:

• Credit cards are a great tool for building credit, but bad credit habits can hurt your finances.
• To get the most out of your credit card, keep up with payments and familiarize yourself with your card’s reward program so you can take advantage of it.
• It’s also important to choose the right credit card for your needs. It’s why PFCU offers credit cards with low rates and no hidden fees.

How do you feel about credit cards? At PFCU, we often see members who have a love-hate relationship with these products.

If you fail to manage your credit cards properly, you could end up with debt that piles up as you struggle to repay your balance and even face steep late payment fees. However, if you learn to use a credit card responsibly, they’ll become a powerful tool for building credit and financing large purchases.

Not sure about how to get the most out of your credit card? We’ve helped thousands of members use a credit card responsibly, and we’re here to share some of our favorite credit card tips. 
 

Why Smart Spenders Love Credit Cards

Should you swipe your credit card and pay for something later if you can afford it now? The answer is yes, as long as you can repay it within your budget.

Charging your credit card rather than using a debit card comes with several benefits.

Credit Card Usage Builds Credit

Every time you charge something on your credit card and pay it off in time, you’re showing credit bureaus you can manage credit cards responsibly. As long as you follow these simple credit card tips, you’ll build your credit over time:
 

• Make your payments on time.
• Avoid carrying a balance higher than 30% of your available credit. 

We recommend paying off as much of your balance as possible each month. It’s a good habit that will help you spend less on interest, and it can make your budgeting more straightforward by consolidating several purchases into a single monthly credit card payment.

Reward Programs

The other main reason to use your credit card is to take advantage of the rewards program. These rewards can take the form of cash back, gift cards or airline miles for your next trip. 
 

Hidden Benefits

Many of our members don’t realize their credit cards have benefits mentioned in the fine print. These can include purchase protection, travel insurance, and more.
 

Common Credit Card Mistakes (and How to Avoid Them)

While using credit cards responsibly is good for your credit and can give you access to rewards and other benefits, they can become a financial burden if you’re not careful.

We often see people make these mistakes with their credit:
 

• Only paying the minimum. It’s tempting to delay repaying a purchase you put on your credit card, but it makes your balance grow and means you’re spending more on interest. 
• Missing payments. Forgetting a payment or not being able to meet the minimum payment usually comes with a hit to your credit score and a late fee.
• Maxing out your credit card limit. You can have a good reason for maxing out your credit card (like a surprise bill), but lenders see a high utilization rate as a sign that you’re not managing your finances responsibly.

It’s an easy trap to fall into. Once your balance gets too high, it’s hard to keep up with payments and late fees and interest build up faster than you can repay your card. The best way to avoid finding yourself in this situation is to follow a few simple credit card tips. 
 

Smart Credit Habits for Using a Credit Card Responsibly

Managing your credit card doesn’t have to be complicated. We recommend using these tools to stay on top of your spending and debt:
 

• Set automated payment reminders so you never miss a due date. Make your payment a few days in advance so your reduced utilization rate shows up on your credit report. 
• You can even go further with automated payments, either with a single payment at the end of the month or multiple payments throughout the month to keep your balance low.
• If your credit card lets you set spending alerts, use them so your balance doesn’t exceed 30% of your available credit or the amount you can comfortably afford to pay off every month with your current budget.

Smart credit card management is easier if you’re using the right card for your needs.
 

Choosing the Right Credit Card With PFCU

Not all credit cards are the same, and before you open one, you should review your options. Pay close attention to interest rates, annual fees, and reward programs.

At PFCU, we offer credit cards with great rates and no hidden fees. With several cards to choose from, you can choose an option with an advantageous balance transfer rate or pick a card that will help you rack up rewards faster.

Learn more about the credit cards we offer or contact us for help choosing a credit-building product.

 

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FAQs About Credit Cards

Should you pay off your full credit card balance every month?

It’s a sound strategy for avoiding interests and potential late fees. It can also help you stay on top of your budget without letting credit card debt build up. However, there’s nothing wrong with carrying a small balance forward, especially if you’re using your card to finance large purchases.
 

Is a credit union credit card right for me?

Credit unions typically have lower fees and better interest rates.Unlike cards from big banks and retailers, our credit card interest rate is capped at 18.00%. If you’re shopping around for a credit card, consider this option.
 

Is getting a credit card worth it?

Yes, having a credit card will help you build your credit, and most credit cards allow you to earn rewards on your usual purchases. 
 

Should I use my credit card for everyday purchases like groceries and gas?

Yes, using a credit card responsibly for everyday expenses is a great way to earn rewards and build your credit. The key is to budget so you can pay off this balance in full at the end of the month, so you don’t get into debt over daily expenses.