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Money Matters: The Truth About Credit Cards
by Kira | Friday, January 26, 2018

Chances are you or someone you know has owned a credit card. It seems that over years, credit cards have gotten a bad reputation. However, if used properly, a credit card can be a great financial tool. Here are few things you need to know should you decide to use one for yourself:

 

1. Secured vs unsecured- The difference? Secured cards require you to deposit money first, usually your limit is directly linked to the amount of deposit. This is a great opportunity CREATE credit! A good rule of thumb is to never use more then 30% of your limit ( if your a BOSS, then you know you use only 6-7% of your credit line). For example, if your credit card limit is $500 than your max usage should be $150 monthly. Also, 6 months of EARLY credit card payments, NOT on time payments,  should bring you closer to the option of unsecured. Unsecured cards are credit driven, the better your FICO score better the odds of approval.

2. Pre-approval vs approved- If you’ve ever received a pre-approval letter in the mail please know that this credit card issuer has made a soft inquiry into your credit file and believes you may be a fit for one their cards. The question is, does this card fit me? What are the benefits? What is the  interest rate? Are there reward programs? Do I care about what they are offering?
3. Be in the know- Having a lot of credit cards is not a sign of great credit. Rather it really just shows a lack of self control. How many cards does one need? Well, your lifestyle should determine the answer. If you frequent Walmart, then having a Walmart credit is justified versus having a credit card you never use. Remember, the issuer gets paid off of the USE of the card. If your account lacks activity, then they may simply cancel the card. After all, what is the point in having a credit card and showing a line of credit which translates into debt on your credit report if your not going to use it??
– Jay
As always…Time is only money when you know the value of your time. 

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