Using Credit

Man holding credit card looking at laptop with woman

Give yourself some credit and learn to use credit wisely.

Credit: noun \ˈkre-dit\ A contractual agreement in which a borrower receives something of value now and agrees to repay the lender at a later date.

Unless you’re independently wealthy, you’ll most likely have to use credit to buy the things you need. (Very few people can buy a home or a car with cash.) So how do you get credit and what does “good” credit mean?

Getting Started

If you’re thinking about using credit for the first time, we recommend starting with a credit card or a car loan. Remember these tips to keep you out of financial trouble and help you build a good credit rating.

  • Make every payment on or before the due date.
  • On credit cards, try not to charge more than 30% of the credit limit and always pay more than the minimum payment required. (For the best credit rating, pay the entire balance before the end of the month.)

Credit Cards

Credit cards get a bad rap sometimes, but it’s all in how you use them. Here are some things to think about when you reach for the plastic:

  • Paying off a credit card bill in full each month helps you avoid paying interest.
  • Know your credit cards’ interest rates. (They can truly be all over the place!) Try to use the card with the lowest interest rate if you’ll be carrying a balance.
  • Cash back and rewards cards are great, but if you’re carrying a balance, you’re probably paying more in interest than you’re getting back in cash or rewards. You may want to re-think how you’re using this card.

We’re very concerned when we see our members using credit cards with less-than-favorable terms. Check your statement… if you’re currently paying an annual fee or late fees higher than $25, you should look at getting a different credit card. We offer Visa cards with rates as low as 9.9% APR. You can transfer the balance(s) from higher interest credit cards to your Linn Area credit card and save yourself some money. If you don’t have a Linn Area credit card, check them out. You can even apply for a card online!

CREDIT CARD PAYOFF CALCULATOR – Use this calculator to see what it will take to pay off your credit card balance, and what you can change to meet your repayment goals.

Car Loans

The #1 goal of a car dealer is to get you into a sales office before you leave their lot. They’ll try to tell you that they offer attractive financing, and they’ll try to get the car sold before you change your mind. That is their job, after all.

It’s best to arrange the financing with your credit union before you go to the dealership. Then you can bargain like you’re writing a check (because you are!) and you can take advantage of dealer rebates.

DEALER FINANCING VS CREDIT UNION FINANCING CALCULATOR – Use this calculator to help you determine whether you should take advantage of low interest dealer financing or credit union financing combined with a manufacturer rebate.

If you get caught up in the moment and buy a car before you’ve called us, ask the dealer if they work with Linn Area Credit Union and, if so, tell them to send the paperwork to us. We have arrangements in place with more than 90 area dealers to allow you to sign the loan paperwork right at the dealer’s office and obtain our best rates. (Subject to standard qualifications.)

We also offer Guaranteed Auto Protection, mechanical breakdown insurance and credit life and disability coverage, at very attractive premiums. You can get these items at any Linn Area walk-in branch after the sale, if you want it.

LEASE VS BUY CALCULATOR – Now’s a good time to determine if buying or leasing is the better option for you.

For more great info about this, check out our Buying a Car page.

If a new car isn’t in the picture right now, you can still save money on your car loan by paying a little extra when you can.

AUTO LOAN EARLY PAYOFF CALCULATOR – Find out how much interest you can save by increasing your monthly auto loan payment.

Home Loans

Even a slightly lower rate might make it worth refinancing.

Many things go into determining whether refinancing will save you money. We’ll take all of these things into account when running the numbers and determining if refinancing is a good idea for you:

  • How long you plan to stay in the home
  • Your current interest rate
  • Your current mortgage loan balance
  • How many years you have remaining on your existing loan
  • How long it would take you to recoup closing costs

Hundreds of members have refinanced their home loans to save money. It’s definitely something worth investigating. Contact our mortgage team today or submit an application online and let us run the numbers for you.

If you have questions about using credit, just give us a call. It’s what we’re here for!