Your credit score is an important part of your life and affects all financial matters, from borrowing money to insurance and more. Building credit in an effort to raise your credit score is no simple feat, but can be attained through a variety of ways – many of which involve the use of revolving credit. The simplest form of revolving credit is a credit card. They can help you build your credit, earn rewards, and finance larger purchases.
Reasons to Have a Credit Card
Using credit cards is a great way to build credit, but making sure you have a low interest credit card facilitates this process considerably. This way, even if you can’t pay the full balance in a given month, you’ll face considerably less cost in interest charges. When using a credit card to finance a larger purchase like furniture for your home having a low interest rate really helps. A credit card can also be useful if you discover you’ve suddenly got an expense you didn’t plan for that you’ll need to pay for over time like a major vehicle repair or you need a new air conditioner. A credit card also offers you convenience and security when making purchases and most cards now have fraud protection built right into their programs, free of charge.
Building Credit with a Credit Card
Making sure that your monthly payments are made on time is a great way to boost your credit score. Additionally, it is a good idea to make sure that you do not spend more on your credit card than you can reasonably afford to pay back – it’s not free money since you’re essentially borrowing against your future self. Think about your budget and make sure you have a plan to move forward efficiently. Building your credit successfully will provide additional opportunities to obtain credit cards with even better interest rates and potentially help improve your ability to finance larger purchases such as a car, home or other major investment.
Rewards and Options of a Credit Card
Many credit cards offer excellent reward opportunities. It’s important to choose the reward type that’s right for you. One of the most important things to consider is a low interest rate. Many cards start with a zero percent “introductory” APR (annual percentage rate), but hike rates up very high after that introductory period. The APR is how much you’ll have to pay on your card if you carry a balance each month.
If you shop at a particular store or online retailer often, getting their card that offers more rewards for purchases made through them could be a good idea. Some cards offer the opportunity to use a point system for discounts on particular items or at particular retailers. Other cards make it possible to earn miles towards air travel or hotel accommodations. Overall, it is important to weigh your options and choose the card that is right for you.