Credit cards are useful tools for consumers and can help you earn money and rewards on everyday purchases.
Just remember, you should always use a credit card responsibly, which means making your payments on time and in full every month.
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Credit Cards 101:
Find the Best Credit Cards:
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How to Get Started with Credit Cards
There are five simple steps when it comes to finding the perfect credit card for you:
- Check your credit score
- Calculate your spending
- Determine the card category you want
- Do the math! (or let us do it for you)
- Apply for the best card for you
Getting started is easy, and you can get the full guide on how to find the best card for you here:
Credit Cards 101
What is a Credit Card?
A credit card is issued by a bank or institution and is a tool that allows consumers to take out loans to in order make payments.
At the end of a month (or time period), the consumer then must pay back the loan in full or pay interest on any delayed payments. The benefit of credit cards is that they typically offer rewards (i.e. 1% cash back) to consumers who use their cards.
How Does a Credit Card Work?
Simply stated, a credit card allows you to make purchases throughout a time period (usually a month) without actually paying for anything until the end of the time period (up to your allowable credit limit).
One of the easiest ways to understand credit cards is to compare them to debit cards.
With debit cards, you instantly pay whenever you swipe the card with money coming directly from a checking account. With credit cards, the issuing bank covers the upfront payment, you don’t have to pay the bank back until the end of the time period.
Why Credit Cards Matter
Credit cards serve two main purposes for consumers:
- They are a tool to build your credit score
- They reward you for making purchases
1. Build Credit
Lenders want to know you are a responsible consumer before giving you money, like for a home or car.
Using a credit card responsibly over time and building your credit score is one way to signal to future lenders that you are a reliable consumer.
2. Reward Yourself
Credit card rewards come in many different forms, including:
- Cash back
- Rewards points
- Travel rewards
- Sign-up bonuses
- Fraud protection
- Additional warranties
- And more
