Credit cards! Can’t live with them, can’t live without them. According to the latest report from the Federal Reserve, Americans now hold a staggering $1.18 trillion in credit card debt. But while debt is a concern, credit cards (when used wisely) are a key part of building your financial future.
Opening and managing a credit card responsibly helps you establish credit history, which plays a major role in your eligibility and rates for large, low-interest loans like auto loans and mortgages. Whether you're just getting started or need a refresher, here’s everything you need to know.
How Credit Cards Work
When you swipe, tap, or insert your credit card, you’re borrowing money from the financial institution that issued the card. You’ll then repay that amount, partially or in full, by the time your monthly bill is due.
If you don’t pay off your full balance, you’ll be charged interest on the remaining amount. This is calculated based on your annual percentage rate (APR) the yearly cost of borrowing. The longer you carry a balance, the more interest you'll owe.
Applying for a Credit Card
If you’re new to credit, a secured credit card is often the best place to start. These cards require a refundable deposit up front, which acts as collateral. In return, you get a modest credit line and the opportunity to prove your creditworthiness. After about 8-12 months of on-time payments, you’ll typically get your deposit back and may be eligible to upgrade to a regular credit card.
As you explore credit card options, check out your local credit union, like Climb Credit Union! Credit unions often offer lower interest rates and fewer fees compared to big banks. In fact, the most recent data shows that credit union cards average 12.86%, while bank-issued cards average 15.29% APR. At Climb, we can give you a great rate on a credit card.
Using Your Card Wisely
You can use your card anywhere that accepts its payment network (Climb uses Visa, the most accepted network). You’re allowed to spend up to your credit limit, but that doesn’t mean you should.
To keep your credit score healthy, aim to use less than 30% of your available credit. For example, with a $1,000 credit limit, try to keep your balance under $300. This helps demonstrate to lenders that you’re not overly reliant on credit.
Understanding Your Statement
Every month, you’ll receive a credit card statement from your issuer. It typically includes:
- A summary of all transactions (purchases, payments, fees, etc.)
- Your current and previous balance
- The minimum payment due
- The payment due date
- The number of days in your billing cycle
- Your credit limit and available credit
- Any rewards earned or used
Always review your statement for accuracy and make note of the due date so you never miss a payment.
Making Payments
Once you receive your statement, you’ll decide how much to pay. If you pay your full balance by the due date, you won’t pay any interest. If you only pay the minimum, you’ll be charged interest on the remaining balance.
You can also choose to pay any amount in between, depending on what you can afford. Just remember: the more you pay now, the less you’ll owe in the long run. Best practice is to always pay off your full balance. If you treat the credit card like cash, you’ll never go into debt you can’t tackle.
You can set up automatic payments with Climb to make sure you never miss a due date. It’s one of the easiest ways to protect your credit score and avoid late fees.
Building and Maintaining Good Credit
Your credit card isn’t just for purchases, it’s a tool for building a strong financial foundation. Follow these best practices:
- Always pay on time
- Pay more than the minimum whenever possible
- Keep credit utilization under 30%
- Request a credit limit increase after 9–12 months of responsible use
- Keep your account active, even with small monthly purchases
Final Thoughts
Credit cards can feel intimidating at first, but they’re a powerful tool for financial growth when used responsibly. From building credit to accessing better loan rates, they open the door to future opportunities.
Earn big with every purchase.
With our Peak Rewards Visa, you’re stacking points for cash back, dream vacations, top brands, and so much more. It’s the card that keeps rewarding, day after day.
- Earn 15,000 bonus points when you spend $1,500 or more on purchases in the first 90 days*
- Pay with points or stack points for cash back, dream vacations, top brands, and more
- No annual fee**
- Variable rate as low as 14.99% APR***
- Use Tap to Pay to make checkouts a breeze
*Make $1,500 in purchases within 90 days of account opening to earn 15,000 points. Bonus points will be added to your rewards points balance within 7 days from qualification. Points will expire on the last day of the month, five (5) years after the date of issuance. To be eligible to redeem Points, your account(s) must be open (meaning not voluntarily closed, canceled or terminated for any reason) and the Rewards Card cannot have any other status preventing authorizations.
**Foreign transaction fees apply; 1.10% of each foreign currency transaction in U.S. dollars, and 0.90% of each U.S. dollar transaction that occurs in a foreign country.
***APR = Annual Percentage Rate. Not all will qualify for the lowest rate.
