Checklist: 6 Factoids to Know Before You Start Using a New Credit Card

Just received a new credit card? Congrats!

We all know that knowledge is power. When it comes to credit cards, you want to accomplish two important goals: use credit without increasing your debt and use the right card for the right purchase.

So, before you head out and spend your limit on craft supplies—just in case—take a quick look at our list first.

1. Know your spending habits—It’s difficult to find the right card for your lifestyle if you have no idea how you prefer to spend. Are you looking for something that will earn rewards points so you can take a free vacation? Maybe you’d prefer a card that pays you back in cash. Will you pay your bill off in full every month or will you carry a balance? Do you want to use it for everyday purchases or just as a safety net?

   There’s a card out there that will benefit each of these options. Take two or three months to track your current spending. Decide if you want to implement changes to better your financial habits. Then, do your research and apply for the card that will best support your goals.

2. Know the interest rate—It’s important to know how much interest you’ll be paying. Why? If you don’t (or can’t) pay off your credit card bill in full every month, this is how much extra you’ll be spending for the things you’ve purchased. Knowing this may make you think twice about charging unnecessary items to your credit card.

3. Know your credit limit—Obviously, it can be a little embarrassing to have a card declined at the point of purchase due to insufficient funds. Aside from this scenario, your credit limit is also a central player in your credit score. It’s all about your utilization rate (the ratio of all your credit card balances versus your total credit limits). The lower your utilization rate, the better your credit score will be—a rate of 30% is ideal. Use less of your available credit and keep your credit limits in mind as you make purchases.

4. Fees and penalties—This is a big one when it comes to comparing cards. Next to a low rate, find a card with as few fees as possible. Whether for specific types of transactions—balance transfers, cash advances or for simply asking for a credit increase over the phone—be aware of the fees and penalties your card charges.

5. Introductory period—If your new credit card came with a low, introductory interest rate, make sure you know when that period ends—typically 3–12 months. These offers include low interest on purchases that are paid in full during this period. Any outstanding balances, as well as any future purchases, will be assessed at a higher interest rate after that time. Keep more of your money by making note of this deadline and paying your bill in full.

6. Rewards and incentives—To get new customers, credit card issuers often run special promotions. These may include offers like rewards points, a limited-time low rate, travel discounts or waived fees. Find what works for you and the way you spend. If you get a card that offers only travel discounts, it doesn’t really benefit you if you rarely step foot outside of your city. Also, be aware of any restrictions, like blackout dates, that come with the credit card program you’re considering. Do your rewards points expire? Are there limits to how many you can earn?

Using a credit card can be scary. (What if I rack up a ton of debt?) But it can also be very beneficial. Rewards and other discounts can add up to a lot of savings. The trick is to know exactly what you’ve signed up for and to practice responsible credit habits—that means not overspending and paying your bill in full every month.

If you’re in the market for a new credit card, add Mountain America Credit Union’s card options to your list. We’ve got something for everyone!

Apply now