[custom_frame_left][/custom_frame_left]Over 178 million Americans have at least one credit card. Of those, the average credit card balance is about $16,000. Often, statistics like this are used to highlight the problem with credit cards: that some people let the balance get away from them and before they know it they have large balances that might take years to pay off. That is certainly true. Many people are carrying large balances that they struggle to pay off.
But the truth is that credit cards aren’t all bad. If you can commit to handling a credit card responsibly, there are numerous benefits. They can help you build credit, rebuild damaged credit, and might also earn you rewards.
1. Building Credit
If you’re young and just starting out, a credit card can be a great way to build your credit. If you’re considering applying for a credit card, be sure you can commit to only using the credit card for small purchases and paying the balance off in total every month. In addition, be sure that you always make at least the minimum payment. Also, don’t apply for more than one card before you have established credit and only use a credit card for large purchases in an emergency. If you follow these suggestions, credit agencies will see that you can make payments responsibly and are capable of managing your expenses, thereby increasing your credit score.
2. Repairing Credit
If you’ve faced financial trouble in the past, you may need to improve your credit. Credit cards can help repair your credit score by proving that you can handle credit responsibly. Making payments on time will help increase your credit score so that you will be approved for loans and better interest rates.
If your credit score is too low, you might find it difficult to get approved for a traditional credit card. But there are some other options if you’d like to use a credit card to help boost your credit score. Often, it is easier to be approved for a department store credit card and your payment history will be reported to the credit agencies, just as a it would with a traditional card. Another option is opening a secured credit card through State Employees Credit Union.
A secured credit card functions much like a typical credit card: You use it to make purchases and each month you will receive a billing statement and be required to make payments toward the balance. However, when you open the account with State Employees Credit Union, you simultaneously open a savings account which contains the amount of money you would like to be available on the credit card – your credit limit, in other words. In this way, SECU is protected in the event you can no longer make payments. Essentially, your credit limit is backed by money that is already in an account. You can read more about opening a secured credit card at SECU here.
3. Earning Rewards
Finally, some credit cards offer cardholders benefits for using the cards. When you use a card with a reward program, each time you make a purchase you are given a certain amount of “points.” You might earn one point for every dollar spent. Some companies offer different point amounts for different types of purchases. For example, some companies offer more points on gas and groceries than on other purchases. You can then redeem points you’ve earned to purchase airline tickets, book hotel rooms, purchase merchandise, and redeem cash back rewards. Many people use these rewards programs to fund vacations and make other purchases.
No matter what your credit needs are, SECU can help. In addition to the secured credit card, we offer a traditional credit card. There is no annual fee, low interest rates, and you can access your account online. Give us a call or stop by your local branch and let us help you with your credit needs!