6 Secrets to Using a Credit Card

Do you want to repair your credit score? Are you new to credit cards? No matter where you are today, credit cards can help you build good credit. However, they can also bury you in debt. Used the right way, credit cards can beneficial financial tools. Unfortunately, many Americans don’t have enough education about healthy credit card usage.

With a little budgeting, making on-time payments, and being cautious, you can boost your credit score. A decent credit score can allow you to get better interest rates, rewards, lease approval, and loans for the things you need. In some cases, your score might be checked by employers.

Be vigilant! It’s easy to get in over your head quickly. If you are one of the thousands of Americans that have credit card debt, you aren’t alone. According to a personal-finance site around 41% of families have credit-card debt with the average amount of $5,700 (ValuePenguin.com). Once high-interest credit cards get maxed out, the large interest payments make it difficult, if not impossible, to paydown the principal.

Here are some secrets to using a credit card successfully:

• Pay off your balance monthly: Don’t borrow from your future and pay interest. If you pay off your card each billing cycle, you can avoid paying interest. Know your limits. Don’t overspend and you’ll get all the benefits of having a credit card without interest. Interest is like throwing money out of the window.
• Stay under 30% of your credit limit: Adhering to this rule will affect your credit score dramatically. Having too high of a balance is a hard mark on your credit score.
• Don't skip payments: Even if your month was financially difficult, make that minimum payment. If you miss a payment, the penalties are usually steep. Missing payments also impacts your credit score.
• Rewards: Why not get rewarded? If you’re using a credit card frequently for purchases you can earn fun rewards such airline miles, gift cards, or even cash!
• Keep your oldest account: Having a long credit history is a simple way to improve your credit.
• Practice with one: If you are new to credit cards or if you are starting over, try to manage just one. This can help you establish good habits, budgeting, and paying it off every month. Several cards can get confusing. With different balances and due dates, it’s too easy to rack up the balances. When you are just starting out or looking to repair your credit, don’t fall for the offers. Sometimes, it’s tempting to sign up for a new card to get the perks of new membership. Don’t bite off more than you can chew with too many credit cards.

For a local bank that cares about you and your financial well-being, visit us at First State Bank of Porter or call us at 219-926-2136.