Be a credit card smartypants
Credit cards can be an easy way to buy things and are lifesavers in an emergency… but they can also ruin your credit and cause years of trouble if you don’t use them right. Let’s make you into a credit card master, shall we?
A credit card is a loan. Technically, it’s a line of credit. When you pay for anything with your credit card, it’s called charging. Whatever you charge on your card, you are choosing to pay back all at once or a little bit each month. But you do have to pay for it all eventually – bummer, we know.
The credit limit is the maximum amount of money you can charge on your Visa card at one time. This means the maximum amount of debt you can go into with this credit card. If you’ve “maxed out” your card, that means you can’t charge any more to it until you pay some of it off. You’ll get a letter before you receive your card telling you what your credit limit is.
How you handle your credit limit influences your credit score, so our advice is to charge no more than 30% of your limit. When you find out how much your credit limit is, calculate 30% of that amount – then try to have less than that charged on your card at one time.
If you need a higher credit limit, contact the credit union and ask if it’s possible to raise it. (If you have a cosigner, we’ll need their written approval to raise it.)
If you owe anything on your credit card, you’ll receive a statement. It shows a list of any charges you made that month and your current balance. You can pay any amount between the minimum payment due (which is listed on your statement) and the entire balance. You have to at least pay the minimum payment listed.
If your payment is late, there will be a $20 late fee charged to your account. Late payments also damage your credit and may cause the credit union to shut off your credit card. If you know your payment is going to be late, you can always contact us and maybe we can help. Don’t wait to ask for help until it’s too late!
To access your credit card information online and sign up for electronic statements, be sure to check out mycardinfo.com once you receive your new card.
Always read the fine print (we know it’s boring)
Not all credit cards are the same but most of them come with a ton of fine print. Each company sets its own rules, rates & fees and they can be tricky to understand. They may offer a low interest rate, but the first time you forget to make your payment on time, you could be slapped with a $35 late fee and/or they double your interest rate after that. Barf! Or they may charge a fee each year just to use their credit card… some annual fees can be as high as $150.
Here is the fine print for the Student Visa Card. (Hit “Ctrl +” to zoom in, “Ctrl -” to zoom out.)
What does that stuff mean?
- If you pay off your entire balance each month, you won’t be charged any interest on purchases.
- If you decide to make payments over several months rather than paying the entire amount at once, you will also be paying 9.90% interest on that balance.
- It’s a non-variable rate, meaning the credit union won’t just change the rate if we feel like it.
- If you make a payment late, we won’t increase your interest rate.
- There is no annual fee.
- There is a fee for using the card in foreign countries.
- If you make a payment late, there is a $20 fee.
- If you write a check to pay your card and the check isn’t good (aka: “bounces”), you will be charged a Returned Payment fee of $20.
Using your credit card properly can actually help you establish good credit
Seriously. If you always make your payments by the due date, and use less than 30% of the limit on your card, you’ll be well on your way to establishing a good credit history. If you don’t do these things (even just a couple times) it will damage your credit.
What is “credit?” Check it out here.
Cash for emergencies
You can get cash with your Visa at pretty much any credit union or bank in the United States that has a Visa logo on the door. It’s called a cash advance. You can also get one at an ATM machine – just insert your credit card and use the PIN number that Visa sends you. The amount of cash you get out is charged to your credit card.
This is best used for emergencies because there is a cash advance fee of 2% of the amount you withdraw (with a minimum of $1 and a maximum fee of $5). Plus, interest on cash advances starts being charged on the day you get the advance. But you can get a cash advance for any amount up to your credit limit…which can be a lifesaver in an emergency.