The Beginner's Guide to Credit Cards

Opening and managing credit cards responsibly is crucial to establishing your credit history, which impacts your eligibility to get a loan and your future loan rates. Here’s what you need to know about opening credit cards and using them responsibly.

How Credit Cards Work
When you use a credit card for a purchase, you’re borrowing money from the card issuer. You’ll repay some or all of it by the bill’s due date. At that time, the credit card company charges interest on your remaining balance. This amount of interest charged is determined by your card’s Annual Percentage Rate (APR), which refers to the annual cost of borrowing money with your credit card. 

Applying for a Credit Card
First card? You might be best off starting with a secured credit card, which offers a modest line of credit. For this product, you’ll deposit funds to act as collateral in case of missed payments. However, if your payments are timely, you’ll get the deposit back after a predetermined amount of time. Then, you can close the account and open an unsecured credit card that doesn’t request a deposit for collateral. 

As you consider your credit card options, look no further than Oregonians! We consistently offer credit cards at lower interest rates than those issued by big banks. 

What Type of Card Should I Choose?
If you’re shopping your options of credit cards, you’ll learn quickly that you have many! There are secure cards, low-rate cards, rewards cards, and even major retailers offer credit cards (think: Costco, Amazon, Macy’s).

The type of card you choose should depend on how you will use the card. If you plan to make purchases and pay them over time, getting a low rate should be your priority. If you plan to make your daily purchases on the card and have the ability to pay the balance in full each month, a card that offers rewards will best serve you.

Remember: Rewards and Retail cards come with a price because the interest rate is often twice as high as a card without rewards or perks. If you carry a balance on this card, you could be paying a whole lot more money in interest than the card company will every pay you in cashback. To learn more about the true cost of owning a rewards card, click here.

Using Your Card
You can use your card to make purchases at any retailer that accepts your card, and charge up to the available credit limit on your card. However, to help keep your credit score high, it’s best to keep your credit utilization below 30% of the available credit. 

What are Credit Card Statements?
You’ll get a credit card statement each month. It will include the following:

• Summary of transactions since the last billing cycle. This includes purchases, payments, balance transfers, cash advances, fees, interest payments and more.
• The balance from the previous billing cycle.
• The minimum payment due.
• The payment due date.
• The number of days in your billing period.
• Your credit limit and available credit. 
• Available or redeemed rewards.

It’s important to review your statement for accuracy and note the bill’s due date so you don’t miss a payment.

Payments
If you pay your entire bill by its due date, you’ll avoid paying interest on the month’s charges and only pay the cost of the actual purchases. However, if you only make the minimum payment, interest will continue to accrue on the leftover balance. 

Maintaining a High Credit Score
Here’s how to build your credit score and keep it high:

• Pay your bills on time.
• Pay more than just the minimum due. 
• Keep your credit use low. 
• Ask for a credit limit increase after nine months of responsible use.
• Keep your cards active.

The Oregonians VISA^® comes with the best perk of all: a low rate. If you’d like more information about the Oregonians VISA or you’d like apply, call or text us at 503.239.5336, apply online or stop by your local branch today.

Your Turn: Have you recently opened your first credit card? Tell us about it in the comments.