|
|
|
|
|
|
Life Events & Financial Decisions
|
|
|
|
|
|
|
|
|
|
Financial Tip
 Have you created an emergency fund for yourself and your family?
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RELATED CALCULATOR
|
|
|
|
|
|
|
|
Using Credit Responsibly
 
|
|
Credit can be a blessing and a burden. Using credit wisely helps you build a strong credit history, which will help you secure future loans and mortgages. However, being careless with credit use can lead you into trouble with poor credit scores and debt.
Here are some steps to help you find, and use, the right credit for your lifestyle.
Find out your credit score
Your credit score is a three-digit number, ranging from the low 300s to the highest, 850, that rates your financial history. You can check it for free once a year here.
- If you have no credit score, you might need to obtain your first credit card from your bank, which can attest to your financial history. You also could put bills, accounts, or small loans in your name to establish a history.
- If you have a poor credit score, look for secured credit cards. These are similar to debit cards, allowing you to provide the line of credit through your own savings. To learn more, click here.
- For those with good credit scores, it’s important to find a credit card that is right for your lifestyle.
Comparison shop
Credit card offers you receive in the mail might not be the best deal for you. Compare credit cards online by your credit score, the type of card and rewards, and details such as interest rates and annual fees.
Ask yourself the following questions:
- Will I pay off the balance in full every month? If so, the interest rate a credit card charges on balances might not be as important to you as possible rewards the card offers.
- What kind of rewards are most important to your lifestyle? Cash back, free airline miles, grocery store rewards, or gas money? Consider credit cards that provide extras for the things you pay for the most.
- Will the rewards outweigh the annual fee of the card?
Pay attention to the following terms:
- APR, Annual Percentage Rate: The amount you are charged on balances. The lower the rate, the less interest you have to pay.
- Annual Fees: Think of annual fees as a membership cost. Many cards have stopped charging annual fees or at least let you negotiate, but do your research.
- Credit limit: How much you can borrow from the credit card company. Be sure to pay attention to the costs of exceeding the credit limit.
- Finance Charge: The total cost of borrowing, including interest and fees, expressed in a dollar amount.
- Minimum Payment: The least amount you’re required to pay each billing cycle.
Know How to Use Your Card Responsibly
Credit cards allow you to make purchases on credit, up to your limit, and pay off those purchases in a timely fashion.
- If you pay off the full balance each billing cycle, you will build good credit and can take full advantage of rewards.
- If you pay only the minimum payment each billing cycle, the credit card company will charge you an interest on the remaining amount, which causes you to pay more in the long run. Use this calculator to determine how long it will take you to pay off your balance if you are only able to afford the minimum payment.
- Always pay the minimum payment on time. This will prevent you from looking bad to creditors and other reviewers of your financial information.
- Read your statement every month and watch for increases in your APR or decreases in your credit limit. Recent changes in legislation have made this easier for consumers. Find details here.
Credit can be a blessing and a burden. Using credit wisely helps you build a strong credit history, which will help you secure future loans and mortgages. However, being careless with credit use can lead you into trouble with poor credit scores and debt.
Here are some steps to help you find, and use, the right credit for your lifestyle.
Find out your credit score
Your credit score is a three-digit number, ranging from the low 300s to the highest, 850, that rates your financial history. You can check it for free once a year here.
- If you have no credit score, you might need to obtain your first credit card from your bank, which can attest to your financial history. You also could put bills, accounts, or small loans in your name to establish a history.
- If you have a poor credit score, look for secured credit cards. These are similar to debit cards, allowing you to provide the line of credit through your own savings. To learn more, click here.
- For those with good credit scores, it’s important to find a credit card that is right for your lifestyle.
Comparison shop
Credit card offers you receive in the mail might not be the best deal for you. Compare credit cards online by your credit score, the type of card and rewards, and details such as interest rates and annual fees.
Ask yourself the following questions:
- Will I pay off the balance in full every month? If so, the interest rate a credit card charges on balances might not be as important to you as possible rewards the card offers.
- What kind of rewards are most important to your lifestyle? Cash back, free airline miles, grocery store rewards, or gas money? Consider credit cards that provide extras for the things you pay for the most.
- Will the rewards outweigh the annual fee of the card?
Pay attention to the following terms:
- APR, Annual Percentage Rate: The amount you are charged on balances. The lower the rate, the less interest you have to pay.
- Annual Fees: Think of annual fees as a membership cost. Many cards have stopped charging annual fees or at least let you negotiate, but do your research.
- Credit limit: How much you can borrow from the credit card company. Be sure to pay attention to the costs of exceeding the credit limit.
- Finance Charge: The total cost of borrowing, including interest and fees, expressed in a dollar amount.
- Minimum Payment: The least amount you’re required to pay each billing cycle.
Know How to Use Your Card Responsibly
Credit cards allow you to make purchases on credit, up to your limit, and pay off those purchases in a timely fashion.
- If you pay off the full balance each billing cycle, you will build good credit and can take full advantage of rewards.
- If you pay only the minimum payment each billing cycle, the credit card company will charge you an interest on the remaining amount, which causes you to pay more in the long run. Use this calculator to determine how long it will take you to pay off your balance if you are only able to afford the minimum payment.
- Always pay the minimum payment on time. This will prevent you from looking bad to creditors and other reviewers of your financial information.
- Read your statement every month and watch for increases in your APR or decreases in your credit limit. Recent changes in legislation have made this easier for consumers. Find details here.
|
|
|
|
|
|
|