According to recent Federal Reserve data, consumers are loading up their credit cards significantly in 2022. Credit cards can be a powerful financial tool when used correctly, but a liability if they are not. Borrowing in March soared by the most on record and 537 million new credit card accounts were opened in the first quarter.
“There are only 350 million people in the U.S, so that number was quite alarming,” said MMCCU President David Murphy. “We wanted to share some tips to help people manage their credit responsibly.”
A credit card is basically a loan from your financial institution. (Read our Credit Card Basics article here.) They assign you a pre-determined credit limit and you can pay back whatever you charge either in full or in monthly installments. If you don’t pay back the entire amount owed each month, you will owe interest on the outstanding amount and any new purchases.
By following the below tips for using your credit card, you can avoid some of the problems and enjoy the benefits of a credit card.
- Don’t spend what you don’t have – Credit cards are not “free money.” They are a high-interest loan from a financial institution. Don’t buy something that you don’t have the means to pay off when your statement comes due.
- Pay off your card in full each month – Credit cards charge high interest rates. By only paying the minimum payment, you’ll end up paying a lot more money in interest.
- Take advantage of rewards – Many credit cards will offer rewards, including cash back on purchases or travel miles. Find a card that fits your lifestyle and (as long as you’re paying off the balance each month) reap the rewards!
Whether you want to pay down balances faster, maximize cash back, earn rewards, or begin building your credit history, we can help select the best card for you. MMCCU members have access to different credit card options through Visa. Learn more here.
