According to Federal Reserve data, Americans under 29 years old are carrying more than $50 Billion in credit card debt.
With this in mind, it is our top priority to help our members reach financial success by understanding the pros and cons of credit cards and how they can affect your credit score. Here are five must-know facts about credit cards.
Different Types Of Credit Cards
If you’ve never had a credit card, choosing the right card can be overwhelming. There are three types of credit cards.
Rewards Credit Cards
Rewards cards give you benefits when you use your card. You can get airline miles, points you can trade in for discounts, or even cash. Just watch out for hidden fees. This card is perfect for members who typically pay off their balance each month.
Standard Credit Cards
This card typically has a lower interest rate and is the ideal card for balance transfers. Additionally, this card can be a great way to help establish or build your credit score. If you plan to hold a monthly balance, this may be the card for you!
Secured Credit Cards
If you have a low credit score (More on that later), you might have difficulty getting a credit card. With a secured card, you’ll put some money in an account with your lender. If you don’t pay your bill, your lender uses that money to make your payment. This card is great for first-time cardholders who have limited credit history who are looking to build up their credit.
How To Get A Credit Card
Getting a credit card is a simple process. When you apply for a credit card, the lender will check your credit score (there’s that term again), income, and other factors. If everything checks out, you’ll be approved!
Earn 2x Cash Back With Select Rewards Credit Card
What Happens If You Don't Pay Off Your Balance Each Month?
If you don’t pay off your credit card each month, all you have to do is pay the minimum, right? Unfortunately, only making the minimum payment can quickly skyrocket your total debt as you get hit with interest.
What Is A Credit Score?
A credit score is a number intended to measure your ability to manage debt. A credit score is widely used by potential lenders.
RELATED: Learn how Honor members can check their credit score for free 24/7
When you apply for a car loan, credit card, home loan, or even a retail credit card, your score could determine the outcome.
The Cost Of Debt
Credit cards are a useful tool for getting things you need even if you don’t have the cash on hand. However, by using credit cards irresponsibly, you could quickly find yourself under an enormous pile of debt with little hope of escape. If you choose to use a credit card, don’t spend more than you can handle paying off.
PAY OFF DEBT: Learn how to establish a realistic plan to pay off credit card debt
Today, everybody has unlimited access to financial resources. While getting into debt is nearly effortless, getting out of debt is much more difficult. At Honor Credit Union, we’re here to help you achieve and maintain a strong financial position and put you on the path to financial success.
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