Credit Cards – Yay or Nay?

Credit cards are sometimes given a bad rap, not because it’s bad to have them, but because some people don’t understand the implications of using them. We’re here to help you understand the benefits of using a credit card wisely: to benefit your financial situation and make your life easier.

Credit cards are really lines of credit that are accessible at your fingertips, by way of that little plastic card. They are accepted almost everywhere, locally, nationally, internationally and online. They are easily accessible, convenient to use and can help build your credit; however, they usually come with a high interest rate, which can cause unexpected charges and fees. How can you benefit from using a credit card and avoid paying late fees? Here’s the scoop:

Top 10 Tips for Using Your Credit Card

1. Set a low limit on your card. If this is your first card, consider setting a limit of $500 or $1,000. 
2. Not a substitute for cash. Don’t use your credit card for everyday purchases like groceries, clothing and gas – this habit can quickly lead to debt. Use your debit card or cash for ordinary purchases.
3. Avoid taking cash advances on your card. Did you know that cash advances are usually charged higher interest rates compared to regular purchases? Also, if you take a cash advance, you will begin accruing interest on that amount on the day the cash was advanced until the total amount of the cash advance is paid off. There is no grace period on cash advances.
4. Pay off your total balance every month. How? Save before you spend. Set aside the amount of money that you will be putting on your credit card in your Young & Free Chequing Account. This will ensure that you can pay off the full balance every month.
5. Always pay the minimum, at a minimum. Sometimes life can throw you unexpected surprises (aka: expenses), so if you are unable to pay off the entire amount of your credit card each month, pay as much as you can afford, and at a minimum pay off the minimum monthly amount. Getting in the habit of only paying the minimum monthly amount will increase the amount of interest you pay and the length of time it will take you to pay off your bill. Use this Credit Card Payoff Calculator to figure out how much money you would need to pay off your debt.
6. Never skip a payment. The worst thing you can do is skip a payment. If you are unable to make your payment for an unexpected reason, call your credit card provider immediately and let them know that you can’t make your payment. Most creditors will assist you and perhaps waive your late fee if you notify them in advance.
7. Improve your credit rating. Using your card responsibly by paying off your balance, ensuring that you always pay your bill on time and trying to stay within 30% of your credit limit will help maintain a good credit score and enable you to apply for additional credit later in life. You may not be thinking of buying a home today, but someday you might.
8. Want or Need? Consider if the item you are planning to put on your credit card is a want or a need. Sometimes those “nice to have items” end up costing a lot more than you had intended.
9. No-fee or low-fee, which is best? There are numerous credit cards being offered and they all have different fees and perks. Depending on your situation, you may want a no fee, student, low fee or gold card. It can be overwhelming, so do your research, ask for help and make a decision that’s right for you.
10. Take advantage of the benefits. Most credit cards have some benefits associated with them, so why not take advantage of them? Some cards offer points, while others offer things like purchase protection insurance, extended warranty or roadside assistance. Know what your card offers – you may be missing out on something you didn’t even know about.

Where Can I Go for Help?

Servus Credit Union is always here to help you with your financial decisions to make sure that they are right for you. You can visit a Servus branch, call us at 1.877.378.8728, or visit our website to learn more about the MasterCard credit card products that Servus has to offer.