January 24, 2025
Credit Cards
These are some things you should keep in mind when it comes to credit cards.
When the topic of credit cards arises, often there are a variety of opinions shared. Some people believe cash is king and are against having and using credit cards. Others prefer credit cards for their convenience and the potential to earn rewards.
While credit cards in general can pose a risk when used irresponsibly, they also have a lot of benefits and can help reduce risk to consumers when they are used responsibly. Here are some things to keep in mind about credit cards:
One of the easiest ways to start and maintain a good credit history is with a credit card. Using a credit card with a low limit to start can help consumers establish a good credit history at a low risk. Some institutions even offer secured credit cards, which pose no risk to them. Secured credit cards usually require a minimum deposit from the consumer which is used to “lend” you money when you pay with the card. This can help students and those with a poor credit score to establish a good credit history.
The ability to borrow money isn’t the only reason to establish good credit. Getting a job, getting insurance, getting a rental lease, and getting utility services are some of the many circumstances where a good credit history can affect if you get a service and how much you’ll have to pay for it. Credit history also impacts the interest rates you can get on loans.
In the highly digital world we live in now, where online shopping is extremely popular, you can also use a credit card to prevent online theft and fraud. Some institutions offer digital card management, where you can freeze or cancel a card by logging into your account online, if you think your information has been stolen. In addition, many financial institutions have fraud detection systems in place that will contact you by phone, text, or email, to verify suspicious purchasing activity.
Emergency situations in this context would be those that require immediate attention or where you may be temporarily unable to earn an income. For example, an urgent house repair or necessary car repair, an unexpected health expense, or sudden job loss. Keep in mind, a credit card can get you through a single emergency, but should never be used as a substitute for income.
Credit cards, if used properly, can be a great tool to help you build credit and be rewarded for responsible use. But there are a few other things to keep in mind when considering them:
Interest rates
Want to learn more about credit? Check out some of our recent blog posts, All About Credit Scores, or Credit Inquiries: Hard vs.Soft Pulls.
While credit cards in general can pose a risk when used irresponsibly, they also have a lot of benefits and can help reduce risk to consumers when they are used responsibly. Here are some things to keep in mind about credit cards:
Credit Cards can help you build your credit
One of the truths about finances today is that a lot of things we purchase rely on a good credit history. Lenders do a risk assessment before determining if they can offer a loan to a borrower. Having a poor or non-existent credit history can deter lenders from allowing you to take out a loan.One of the easiest ways to start and maintain a good credit history is with a credit card. Using a credit card with a low limit to start can help consumers establish a good credit history at a low risk. Some institutions even offer secured credit cards, which pose no risk to them. Secured credit cards usually require a minimum deposit from the consumer which is used to “lend” you money when you pay with the card. This can help students and those with a poor credit score to establish a good credit history.
The ability to borrow money isn’t the only reason to establish good credit. Getting a job, getting insurance, getting a rental lease, and getting utility services are some of the many circumstances where a good credit history can affect if you get a service and how much you’ll have to pay for it. Credit history also impacts the interest rates you can get on loans.
Safety in purchasing
A huge benefit to utilizing a credit card over cash is the safety factor. If you walk around with cash and it is stolen or lost, it’s very rare that you recover it. A credit card, however, provides you with opportunities to prevent or recover from theft. If your card is stolen, you can contact the financial institution and have them cancel the card. And if it happens to be used before you can cancel it, most of the time you are not liable for the fraudulent charges.In the highly digital world we live in now, where online shopping is extremely popular, you can also use a credit card to prevent online theft and fraud. Some institutions offer digital card management, where you can freeze or cancel a card by logging into your account online, if you think your information has been stolen. In addition, many financial institutions have fraud detection systems in place that will contact you by phone, text, or email, to verify suspicious purchasing activity.
Benefitting from rewards
Many credit cards offer perks for using them, in the form of points you can redeem for products or services, or cashback! Using your credit card for your normal, everyday purchases like groceries and gas can be an easy way to rack up points that equal big rewards. Just be sure to make regular payments to avoid accruing unnecessary interest charges on these everyday purchases.Emergency preparedness
We highly recommend that everyone create an emergency fund to help offset the cost of unexpected or emergency expenses. Sometimes this is a tough ask, and emergencies may arise before the fund is established. In these situations, a credit card can be a lifesaver.Emergency situations in this context would be those that require immediate attention or where you may be temporarily unable to earn an income. For example, an urgent house repair or necessary car repair, an unexpected health expense, or sudden job loss. Keep in mind, a credit card can get you through a single emergency, but should never be used as a substitute for income.
Things to keep in mind with Credit Cards
Credit cards, if used properly, can be a great tool to help you build credit and be rewarded for responsible use. But there are a few other things to keep in mind when considering them:
Interest rates
- Interest rates can vary depending on the financial institution and the market, but your actions when using the card can also impact your interest rate. Your rate can increase when you miss a payment or have a high balance. You also want to make sure that you know if the initial interest rate is a promotional rate that will change at the end of the promotion. It’s a good idea to look around and find credit cards with low interest rates, and no annual fees!
- There are many credit cards that offer rewards, but some may be rewards you’re not interested in. If you don’t do a lot of traveling, a travel rewards card may not be a good fit for you. Some credit cards offer cashback rewards and some, like the Point Breeze Visa Credit Card with UChoose Rewards, let you choose what rewards you prefer (including cashback, products, event tickets, and more!). These are a great option when you don’t want to be tied to a single reward type.
Want to learn more about credit? Check out some of our recent blog posts, All About Credit Scores, or Credit Inquiries: Hard vs.Soft Pulls.