How to Use a Credit Card Responsibly

Credit cards are powerful financial tools that, when used responsibly, can offer numerous benefits. However, credit cards have their own set of responsibilities and it’s important to use them wisely.  

At Park View, we prioritize our members’ financial well-being and believe in preparing them with the knowledge to make smart money decisions. To help you swipe with confidence, we’ve broken down how to use your credit card responsibly.

The Benefits of Responsible Card Use 

When used responsibly, credit cards can:

• Offer Convenience: Credit cards are widely accepted and eliminate the need to carry cash. 
• Build Credit History: Responsible use helps build a positive credit history and improves your credit score. 
• Offer Rewards and Benefits: Many cards offer rewards like cash back, points, or travel miles. 
• Offer Credit Card Offers and Discounts: Exclusive offers and discounts are available with many credit cards. 
• Assist With Expense Tracking and Management: Statements provide a detailed record of spending, helping with budget management. 

Be Aware of Your Limit 

When approved for a credit card, you’ll be given a credit limit which is outlined in the terms and conditions of your credit card. Knowing your credit limit will help you monitor your spending and avoid maxing out your credit score.  By staying within this limit, you demonstrate responsible usage and maintain a healthy credit utilization ratio, which is a key factor in determining your credit score. 

What is Responsible Card Use?  

1. Pay Off the Balance on Time: The single most important habit for building your credit score and safeguarding your finances is paying off your credit card balance on time each month because payment history is a major factor in determining your credit score. By consistently paying your balance on time, you’ll will boost your credit score and avoid costly late fees.
2. Pay Off the Entire Balance: Ideally, aim to pay off your balance in full, as minimum payments often leave a balance that accrues interest that can quickly add up. If you can’t afford to pay your whole bill, pay as much of it as you can for now, and pay the rest of it off as soon as possible. Some cardholders find it helpful to make multiple credit card payments each month to keep their balance low. 
3. Spend Below Your Limit; To pay off your balance in full every month, it’s important to only make purchases that are below your credit limit and avoid using the card as a loan. Continuously purchasing more than you can afford or maxing out your credit card limit can easily trap you in a cycle of debt since interest can add up quickly.  

What You Can Do 

• Create a Monthly Budget

Creating a budget will help you create a plan for your money so you know what you can afford. Creating a budget will allow you to know if you can splurge to purchase a new pair of shoes on your credit card because you know that you have money for your other monthly expenses. To get started, consider using our financial wellness resource Banzai, to create a monthly budget. 

• Understand Your Credit Card Terms 

  Before using your credit card, it’s important to familiarize yourself with your credit card’s terms and conditions. Terms and conditions, also called Cardholder or Credit Card agreement, document the rules and guidelines of the agreement between a credit card issuer and a cardholder. Familiarize yourself with items such as:  

  • Annual Percentage Rate (APR): This is the yearly interest rate you’ll pay if you carry a balance.  
  • Credit Limit: The maximum amount the credit card company allows you to borrow.  
  • Fees: Be aware of various fees, such as late payment fees, annual fees, and foreign transaction fees.  

• Enroll in eStatements and Set Up Account Alerts 

One way to ensure you’re not overspending or forgetting about your monthly statement is to set up account alerts and enroll in eStatements for your credit card.  In addition, alerts will also notify you of suspicious or fraudulent activity on your card. If you have a Park View credit card, you can set up account alerts, security alerts, and fraud alerts and receive them via email or text message. 

• Get a Card from Trust Financial Partner 

With so many different credit card options available, choosing the best one for you can seem daunting at first. At Park View, we have a variety of credit cards that fit your needs. Whether you want to pay down balances faster, maximize cash back, earn rewards or begin building your credit history, we have the ideal card for you. Learn more about our consumer credit card options or apply online. 

Remember, a credit card should be a tool that works for you.  With discipline and mindful spending, you can enjoy the convenience, rewards, and security that credit cards offer while ensuring your financial stability and growth.