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How to Use Credit Cards Responsibly

Credit cards are valuable financial tools. Whether you use them on a daily basis or have them just for emergencies, it’s important to know how to make the most of credit cards without tripping over fees, penalties, and hits to your credit score.

Below are 10 tips to use your credit cards responsibly.


#1 Pay Off Your Balance Monthly

The single best way to make credit cards work for you is to pay the balance in full every month—even one day late can cost you.[1]

If you can make this a practice, it will help you:

  • Stay within your budget instead of charging beyond your means
  • Avoid paying any interest charges
  • Stay away from penalty fees
  • Build a positive credit history and higher credit score


#2 Know Your Fees and Penalties

One of the biggest pitfalls of credit cards is racking up fees and punitive charges that you not only have to pay, but pay interest on. A new card comes with a lot of fine print to review, but it’s worth the time to read through the details.

Make sure you understand exactly how much of a hit your wallet will take for:

  • Late, missing, or returned payments
  • Cash advances
  • Out-of-network ATM usage
  • Charging over your limit
  • Foreign transactions
  • Replacement or additional cards


#3 Limit Your Use

Particularly for young people, it can be difficult to avoid treating a credit card like a magic wand that can grant your wishes. Make a plan for how you’ll use your credit card or cards, and how you’ll keep track of your spending.

Remember, credit cards carrying balances turn into high-interest debts you have to repay. If you’re in the habit of overusing your card, ask yourself, “is this something I’d take out a bank loan to pay for” before charging an amount you can’t pay off in the same month.

For a good rule of thumb: If you can’t afford it now (and it’s not an emergency), it’s not worth purchasing on your card.


#4 Limit Your Access

If you have multiple cards, carry only what you need with you on a daily basis. Keeping one or more cards in a secure location can help you avoid impulse buying.


#5 Review Your Statements

When you receive a statement, review all the charges and follow up on anything you don’t understand. You have a limited amount of time to contest incorrect charges or fees.


#6 Automate Your Payments

Setting up automatic payments can be a huge help in avoiding late or missing payments.

Depending on your banking and credit card providers, you may be able to set up and automatic payment or transfer from a bank account to cover:

  • The minimum payment due
  • A set amount each month that will exceed your minimum
  • The balance in full each month

If you’re juggling accounts or living paycheck-to-paycheck, then you may need to find another way to ensure you have calendar reminders and alerts in place to make your payment obligations.


#7 Ask for Help

Don’t hesitate to call the customer service line for your card to ask for information or assistance. Agents may be able to forgive fees and penalties, particularly if they’re unusual on your account, or they can help you set up a payment plan you can commit to.


#8 Ask for Extras

Let your provider know if you’re dissatisfied or shopping around. Ask if they can offer a lower rate, higher benefit level, or other perks to keep your business.


#9 Understand How Cards Affect Your Credit

Credit card accounts are part of building a credit history and a healthy credit score. When you apply for a mortgage, auto loan, or personal loan, potential lenders evaluate:

  • Your repayment history, which makes up 35% of your credit score calculation[2]
  • How long you’ve managed your loans or credit accounts
  • Your credit utilization—using some but not all of your available credit on a regular basis


#10 Start With Your Credit Union

Finally, select a reputable provider for your primary credit card. It’s easy to be attracted to introductory offers and rewards, but the cost of higher APRs and fees can make fly-by-night and for-profit providers a losing deal for you.

On the other hand, as nonprofit providers owned by their members, you’ll find credit union loan and card rates among the lowest on the market.

New Jersey residents qualify for some of the best credit union credit cards available, from North Jersey Federal Credit Union (NJFCU). Our goal at NJFCU is to enable our members to have financial freedom, beyond-expectations service, and the programs and offerings to meet their goals.


Ready to apply for a credit union credit card with NFJCU? Start here.

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