It’s an exciting moment when you get your first credit card. But before you start tapping to buy a snowball, purchase groceries, or fill up on gas, it’s important to understand how credit works.
Learning to use credit responsibly is key to building financial independence. Let’s review some credit card basics and smart habits for using them.
Credit cards 101: What they are and how they work
Credit cards are a convenient way to borrow money to buy groceries, pay for gas, or book a trip.
When you apply for a credit card, the lender (like SECU) checks your financial history to decide how likely you are to repay the money it lends you.
If you’re approved, they’ll give you a credit limit. This is the maximum amount you can borrow each month.
What happens when you use your card?
When you use your card to buy something, the lender pays the store or vendor on your behalf and subtracts that amount from your credit limit. Then, at the end of the month, you’ll get a statement that totals up what you spent and shows what you owe.
You’re responsible for paying that amount back by the due date.
If you can, it is best to pay off the full statement balance each month. This helps you avoid interest charges and build a strong credit history. If you can’t pay the full amount, you’ll need to make at least the minimum payment by the due date.
Any unpaid balance will carry interest, also known as the APR (annual percentage rate), and it adds up quickly.
Why credit matters (especially for young adults)
Learning how to wisely use a credit card is one of the easiest ways to start building your credit score. Your credit score tells lenders how trustworthy you are when it comes to borrowing money.
A higher score can help you:
- Rent an apartment more easily
- Qualify for better loan terms when buying a car or home
- Save money on insurance or future interest rates
Good credit gives you more options and flexibility down the road. And it all starts with building smart habits now.
Credit card tips for beginners
- Start small: Open one card at a time and only charge what you can afford to pay off in full each month.
- Pay on time, every time: Late payments lead to fees and damage your credit score. Set up reminders or autopay so you never miss a due date.
- Know your limits: Try to use less than 30% of your available credit. For example, if your card limit is $1,000, aim to keep your balance under $300. This helps boost your credit score.
- Monitor your account: Check your transactions regularly and set up alerts to catch any unusual activity. Staying on top of your spending helps you stay in control.
What should I use a credit card for?
It might be tempting to take your new credit card on a shopping spree. But, it’s best to avoid using your card to splurge. Use them for:
- Recurring bills that you know you can pay off each month
- Online or travel purchases where added fraud protection gives peace of mind
- Unexpected expenses, like car repairs or medical bills
- Big-ticket items that might come with purchase protection or extended warranties
Building credit wisely starts now
Using credit wisely now is part of creating long-term financial wellness. It helps open doors later when you’re renting your first apartment, getting a new car, or even buying a home.
- Ready to take your first step toward smart credit use? Explore our credit card options or schedule time with a financial counselor to find the best fit for your goals.
- Saving for your future is another important part of financial responsibility. If you want to make your savings work harder for you, consider opening a high-interest certificate of deposit (CD) account.
Wherever you are in your financial journey, we’re here to help you build credit the right way, save for your future, and provide personalized support.
