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Why Use a Credit Card?

Why use a credit card?

Credit cards can be a quick and easy way to borrow money to pay for things or pay monthly bills. Let’s say you are window shopping and spot a must-have pair of shoes and you have no cash to hand. You can simply pay with a credit card. Or maybe you need a new dishwasher or washing machine, but it’s still a long way to pay day. Don’t worry! You can put the purchase on a credit card and pay it off over time.

Extra charges

There are some downsides to credit cards. If you don’t pay your monthly bill in full, you could start to rack up interest charges. There are also penalty fees for late or missed payments. But if you play your credit cards right, they can be a great way to manage your money, particularly if you regularly shop online.

Borrow money for free

When you pay for something with your credit card, you are essentially borrowing money like a loan with a certain interest rate. The difference is that you can avoid paying that interest if you pay off the entire balance. In other words, you can borrow money for free.

Spread monthly payments

If you are unable to pay off the balance each month, a credit card can help you to spread out the monthly payments. But you will be charged interest. While Eagle Federal credit card interest rates range from 8.9% to 14.5%, a typical rate on a card is about 18%, so it’s not cheap. You should therefore think of a credit card as a short-term loan. Always try to pay more than the minimum monthly payment, otherwise you will spend a fortune in interest and could take years to clear the debt.

Pick a card

There are various different types of credit cards and the right card for you depends on your credit history spending habits. If you always pay off your balance in full, the interest rate on the card is irrelevant. So look for a card that offers rewards.

Or, you can choose a 0% balance transfer card if you have already built up a debt on another card or cards at a high interest rate. With this type of card yo­u can move a debt over from an existing credit card – there will be a fee for doing so. The balance transfer fee is paid upfront and added to your balance.

Some people can’t be bothered to switch cards frequently, so they might prefer a card that offers a low lifetime rate for either purchases or balance transfers. Eagle Federal offers low rate cards with no balance transfer fees.  Click here to learn more.

Credit history

When you apply for a credit card, the issuer will carry out a credit check. If you have poor credit history, your application could be turned down or not be offered the advertised rate but a higher rate of interest. This is called risk based pricing and the rate you see advertised will be the ‘representative annual percentage rate’. People with a low credit score often find it difficult to get credit, but they can apply for credit builder cards. They often charge high rates of interest but they can help to improve your credit rating.

Poor credit history or not, Eagle Federal can offer help with improving your credit score, managing your existing credit cards or get you started with a new Eagle Visa Credit Card.  Give us a call at 888-281-8485 or visit www.eaglefederal.org to see what we have to offer you!

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