We continue to process the pain and hope of our nation’s uprising for racial justice amid a global health crisis. You can see our recent statements on the uprising here, our COVID-19 web page here, and our Race & Housing resource center here. Expanding homeownership is a key component of racial equity and health, so our mission has never been more important—and we’ll continue to share the stories of Habitat’s work.
Credit cards can be an extremely valuable form of purchase. But they can also be dangerous if not used carefully. In fact, according to CNBC, the ability to “buy now, pay later” has led 55% of credit card-carrying Americans to debt.Not only that, but credit card mismanagement can hurt your credit score, which affects your ability to get the lowest lending rate on a new home.
In our newest YouTube series video, Homeowner Development Manager Pa Lor walks us through the good and the not-so-good sides of credit cards.
How to Pick the Right Card
If you’re considering applying for a credit card, before doing anything else, ask yourself why you’re applying for it. Are you trying to build credit, get a discount on your purchase, take advantage of the bonuses/perks offered, or something else?
There's a variety of cards to choose from and each offers different perks. Knowing your end goal will help you pick the perfect card for you. Some cards offer cash back rewards, or travel points, or discounts on certain brands or stores. Do your research online to compare cards and determine which one suits your needs.
Also consider that some cards have annual fees. That means you’re paying a certain amount of money on a yearly basis to have that card, whether you use the card or not. The flip side of those cards is that these cards often offer bigger bonuses.
Be Mindful of Your Charges
When you use a credit card, you don’t physically see the money you’re exchanging, so it’s easy to lose track of just how much you’ve spent (unlike cash). Pa suggests setting notifications to keep yourself on track. “With a lot of credit card companies, you have the option of setting an alert when your limit reaches a certain amount,” she says. “So if $1,000 is the limit I’ve set, I will receive a text when my balance reaches $1,000.”
Remember that even if you don’t have to pay those charges right now, you will soon. And if you’re not able to pay back that full balance, interest fees will come into play, which makes everything more expensive.
Only Use Your Credit Card As Needed
Remember, you don’t have to use your credit card for every purchase. A good way to keep a lid on expenses is to only use your credit card when you know you have money in the bank to cover it. But if you’re concerned about losing track of how much you’ve spent (even with notifications set up), then just use your credit card on an as-needed basis.
Being careful with your money means you’re better equipped to buy your first home. Learn more about first-time homeownership by subscribing to our YouTube series, where you can see more tips from Pa and other members of Twin Cities Habitat for Humanity.