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Using Credit Cards Wisely

Borrowing money is essential to building credit, but it can be intimidating because nobody likes getting into debt. If you're nervous about building your credit because of this, you're not alone, and WaFd Bank is here to help. Below are some tips for using credit cards wisely, but don't forget that our bankers at your local branch are also a resource!

Woman using credit card holding her cell phone in living room
Pay Back What You Borrow

This might seem obvious, but sometimes paying back what you borrowed is not all that simple or easy. When you borrow money with a credit card, the payment size and the total amount you have to pay back is determined by your interest rate and how much you borrow. If your interest rate is 24%, over a year's time you'll be paying back up to $240 on top of the original $1,000 you borrowed. There is a grace period with credit cards where you are not charged any interest, so it's a good idea to find out what those dates are (at least 21 days by law) and use that to your advantage if you can.

Use Your Card

With your interest rate in mind, only borrow what you know you can pay back in the same month, or at least in less than six. This way, you'll still be building your credit and you won't have to pay high amounts of interest. You will still need to use your card to show good payment history and contribute to your score so don't be afraid to use it for some purchases. Think about using it for things like gas or groceries and making the payment on your card when you get home. Transactions do take time to show up on your statement, but you'll know exactly what will be charged and what to pay.

Top Three Tips for Using Credit Cards Wisely
  • Grace period: Most credit cards offer you a short period of time to pay back what you borrowed before you're charged interest. This is grace period is usually around 30 days, or whenever your credit card statement is generated. So if you find yourself short on case, you can use your credit card instead of applying for a personal loan.
  • Helps to build your credit
  • Fraud protection: if you haven't had fraud on your debit card, statistically it's just a matter of time until you do. By using a credit card for big purchases or online shopping, if you do end up having card fraud your grocery money is safe. While any disputed charges are being investigated, your card will most likely be frozen until it's resolved, but rest easy knowing your budget won't be impacted.
  • Many credit cards also offer bonuses and rewards. While these are designed to make you want to spend, but if you're disciplined and stick to paying back what you borrow within the grace period, the rewards can be more than worth the annual fee, if the card charges that fee.
  • Discounts and protection when travelling are also things that your credit card can offer. In particular, hotel rooms and car rentals will charge you more if you use a debit card rather than credit, or they will put a hold on your money. Even if you've budgeted for your trip, this can get tricky if you've got bills to pay or the hold is a large amount.
Need help managing your money or applying for a credit card or loan?

We're here to help! No question is too small, and with WaFd Bank you also have access to tools and services to help you manage your finances and get the most from your money. Visit us at your neighborhood branch, give us a call at 800-324-9375, or check out our credit card options to see what could work for you.