- February 8, 2021
- Posted by General Electric Credit Union
- 7 read
Is It Time for a New Credit Card?
Your first thought after opening your wallet this morning was, “I should get a new credit card just for fun,” right? Okay, probably not. But maybe if you can consolidate debt to lower your interest rate?
Credit cards have a reputation for encouraging cardholders to spend money they don’t have—especially when enticing offers come in the mail. Believe it or not, credit cards (and those from a credit union specifically) can play an important role in your financial portfolio—you just need to use them to your advantage (and not for games).
One of the top reasons to begin using a credit card is because responsibly using one can improve your overall credit score. A good credit score can help with a variety of things—from getting approved for a car loan to qualifying for an apartment or home. Credit scores are based on a variety of factors and are used by lenders to assess risk. In other words, how likely are you to be able to pay back the credit that may be extended for your use?
One factor that goes into your credit score is credit history—how far back do your accounts, such as credit cards, date? People with more history, especially a positive history, are seen as more reliable and are more likely to not only be approved by lenders, but also to snag those great rates.
Think of it like this ...
Three people ask you for a $500 loan:
- Person A is a friend who you’ve known for over a decade and have loaned money to before. He’s always paid you back on time.
- Person B is a friend who you’ve known for a decade but have never loaned money to.
- Person C is a person you met last week.
Who are you most likely to loan the $500 to? Probably Person A or Person B, and if you only had $500 to loan, you’d probably choose Person A, right?
Lenders are thinking along the same lines; since they can’t literally know you, they have to look at a collection of data and the more data they have (the longer the history), the more certain they can be about what type of borrower you’ll be. Hint: Aim to be Person A.
- Tip: The length of your credit history accounts for 15% of your credit score. Learn more about other factors to be mindful of and how to improve your score in General Electric Credit Union's (GECU) free, downloadable eBook The Ultimate Beginner's Guide to Credit Scores.
Enjoy the perks
Why get a credit card if you don’t take advantage of all it offers? For one thing, many credit cards don’t have annual fees—which means whether you use them once or 100 times a year, there’s no fee. Sign up and you may even be the recipient of a one-time bonus or introductory offer. Not to mention, some credit cards give you access to online reward portals where you can find significant discounts at popular retailers, merchandise, and more. #perksaplenty
Credit cards are also good to have on hand for emergencies but keeping them active allows for cash back and other reward opportunities. The more you use the credit card, the more rewards add up to significant savings over time, or give you other perks, like purchase protection, travel benefits, and more. Consider your credit card for big-ticket purchases or reservations (like rental cars or hotel rooms)—the points or rewards you earn can play a significant role in your next getaway weekend or home improvement update.
Keep your oldest credit cards around and use them periodically
It might seem strange to only use a credit card once in a while, but if you consistently pay them on time (when you do use them) and keep the number of cards to a minimum, you’ll reap the benefits (like building your credit history/score as mentioned above). You can avoid interest as long as you don’t revolve a balance from one month to the next. Tip: carrying a balance is not required to build credit!
It sounds counterintuitive at first, but credit cards have safety benefits. Because a credit card isn’t directly linked to a checking or savings account, there is less risk of a thief gaining access to the money in these accounts if your card is stolen. Not to mention, protection against credit card fraud is a big deal these days and top priority for credit unions and other financial institutions. Most credit card companies offer a number of consumer protections such as rental car insurance.
Lost or stolen credit card? Simply cancel it and call for a free replacement (not something you can do with cash). Additionally, you are there’s zero liability for fraudulent credit card use, so you don’t need to worry about theft as long as you report your card as lost or stolen immediately.
Credit cards at GECU
So all of this sounds great and you’re ready for your first (or another!) credit card. Consider signing up for one from GECU. Here are four reasons why:
- With industry-leading low rates for purchases, balance transfers, and cash advances, GECU offers a card that fits your lifestyle. Want premium perks? Choose the Visa Signature®. Need to get back to the basics with your spending habits? Consider The Classic. No matter which credit card you select from the Credit Union, there’s one for you and your needs.
- Get enhanced rewards and bonus opportunities on select cards. Rewards don’t expire and there are no caps. Simply shop and earn.
- Have a question about your credit card or run into an issue? 24/7 support is available to provide cardholder information and assistance.
- Wondering what your FICO® Score is? View it for free with Online Banking and the General Electric Credit Union mobile app.
Included with all GECU credit cards:
- Cell phone protection
- Roadside Dispatch®
- Travel accident insurance
- Purchase security
- Auto rental collision
- Return protection
- Baggage delay reimbursement
Why choose GECU
At General Electric Credit Union, being a member means more than just better banking—it means being part of a community with access to solid financial solutions that put YOU first. It’s easy to join, as membership is open to anyone in Greater Cincinnati. You’ll find GECU consistently offers area-leading deposit and loan rates, has lower fees than banks, provides robust digital tools, and nearly 100,000 free ATMs2 across the country.