Get smarter about your money with this Financial Wellness Minute. Credit cards are quick and convenient — and an essential tool in building credit. I'm Patrick Voigt, manager at
Mid Minnesota Federal Credit Union's Detroit Lakes Office, here to break down the pros and cons of credit cards. Here are some advantages:
- Having a credit card can help cover unexpected costs.
- Using a credit card for purchases can protect you from the impact of theft or fraud because card companies help protect you and can manage the recovery process.
- Many credit cards include rewards programs, like cash back, rebates, and travel points. Using them to pay for everyday purchases can be a responsible way to earn rewards.
- Some cards provide travel insurance, and they are convenient while traveling internationally because the currency conversion will happen automatically.
Be aware of some drawbacks of credit card use:
- If you're not careful you can easily spend more than you can afford. Credit cards are handy for big-ticket purchases, but develop a plan to pay off the balance quickly.
- When you carry a balance on your credit card bill, you get charged interest. Many cards feature introductory offers of zero-percent for a short period of time, but the average interest rate for a credit card was 24.72% in August per Forbes Advisor*, those rates add up interest charges very quickly.
Using a credit card responsibly can help boost your credit score and be convenient, but be cautious for overspending and accruing debt. Want to know more about credit cards or have a weekly financial wellness tip sent to you? Sign up below or, contact your local
Mid Minnesota Federal Credit Union Office.
Sign Up for a Weekly Financial Wellness Tip Mid Minnesota Federal Credit Union is federally insured by the NCUA and we are an equal housing lender. *Sources: https://www.newyorkfed.org/newsevents/news/research/2021/20211122 https://www.forbes.com/advisor/credit-cards/average-credit-card-interest-rate/ https://www.yourmoneyfurther.com/blog/post/YMF/2022/03/12/shape-up-your-credit-score
