Credit Card Basics
Getting your first credit card can be a major milestone and a useful financial management tool. If you’re just starting out, or trying to get your credit situation back on track, do some research and learn more about how to use credit responsibly.
With a credit card in your financial toolbox, you can enjoy the convenience and added security to make purchases without needing cash on hand. Simply put, a credit card lets you borrow with a promise to pay later. Each month, your card purchases are tallied and you’ll get a bill for the amount you borrowed.
Don’t Borrow Too Much at Once
When you’re approved for a credit card, you are given a credit limit. This is the max amount that the credit card company, or card issuer like Pyramid FCU, will let you borrow at one time. If you constantly get close to that limit, creditors can view you as a high risk borrower. The percentage of the available credit limit you use is called your credit utilization ratio. The rule is to keep your ratio under 30%; going higher than this can negatively impact your credit score. While a credit card gives you flexibility, it can also spiral out of control if you're not keeping an eye on your spending.
Pay Your Balance Off in Full and On Time
The single biggest thing you can do with your card to build your credit score and protect your finances is to pay off what you owe on time. You don’t want to be carrying over unpaid balances or consistently making late payments because these actions can cause you to slip into a situation where you’re unable to pay off your debt. Paying your balance off by the due date every month will boost your score and keep you from paying interest. If you've found yourself falling behind, that's okay. Make a plan to start paying off what you owe and get on top of your monthly payments.
Know the Cost of Credit
Unless you always pay your balance in full, you should look first at a credit card’s interest rate. The rate you pay is a major factor in determining how much credit costs you.
Pyramid FCU offers a great low introductory rate of 4.99% Annual Percentage Rate (APR) for the first six months. After the intro period, the regular fixed-rate is 13.99% with no annual fee.
Some interest rates, known as variable or adjustable rates, change from time to time, either at the discretion of the card issuer or according to a formula. The most common is tied to the Prime Lending Rate published in the Wall Street Journal. Fixed rates can change as well, but you’ll be given notice when your rates are going to change. Make sure you review the terms and conditions, including rates and fees, before you click submit on a credit card application.
Use a Secured Credit Card
If you're opening your first credit card account or you're trying to rebuild a damaged credit score, a secured credit card account is one of your best options. The main advantage of a secured credit card is that you cannot use it to spend outside your means. You are required to make an initial deposit to open a secured card, and after that you will only be able to spend up to 100 percent of that deposit amount. For example, if you put $500 in the account, you can charge up to $500 on your secured card.
If you consistently make your payments on time, it could be possible to move from your secured card to an unsecured card from a credit card issuer, boosting your credit score. Unsecured cards don't require an initial deposit to open, and it is possible to charge more than you can pay off. For this reason, secured cards are the best option until you're certain you will always spend within your means and pay off your balance on time.
Build it or Ruin it!
Consistent use builds your credit history and shows potential lenders that you can borrow and pay back money responsibly.
But credit does have a downside. Although many people use credit wisely, some end up owing more than they are able to repay. It may be because they have lost their jobs or are burdened by major medical expenses. It may be that they've been unrealistic about what they can afford to charge, or that they don't realize how deeply in debt they are. Whatever the reason, the consequences are costly and put access to future credit at risk.
Whether you’re shopping for a new card or getting a handle on an existing one, here are some great resources from the Consumer Financial Protection Bureau on managing your credit card and more. Explore resources at:
Ready to get started with your own Pyramid FCU Visa Credit Card? Give us a call at (520)795-7950 and a Member Service representative will answer your questions and help you apply. Or you can apply easily online at
While we hope you find this content useful, it is only intended to serve as a starting point. Your next step is to speak with a qualified, licensed professional who can provide advice tailored to your individual circumstances. Nothing in this article, nor in any associated resources, should be construed as financial or legal advice. Furthermore, while we have made good faith efforts to ensure that the information presented was correct as of the date the content was prepared, we are unable to guarantee that it remains accurate today