Bottom line:

  • A credit card allows you to borrow money to make purchases.
  • You need to pay the money back each month in full or make at least a minimum payment.
  • Your first credit card can help you build good financial habits when you use it for everyday purchases you can already afford and pay it off each month.

First credit card basics

A credit card allows you to borrow money for purchases, up to a set limit. Each month, you’ll need to pay the money back or make at least a minimum payment by a specific date. Over time, your purchases and a strong record of making full payments on time every month allow you to build credit.

CEFCU credit card

Your first credit card shouldn’t be complicated; just think of it as a tool that will help you build steady spending and payment habits and help you grow financially. You can keep things simple by using your card only for the things you already buy — gas, groceries, streaming, concert tickets — and then pay it off every month.

Terms you should know:

  • Statement balance: The amount you owe for a specific billing cycle.
  • Current balance: What you owe in total today on your credit card.
  • Due date: The date by which payment is due to your card provider.
  • Minimum payment: The lowest amount you must pay for a given billing cycle to keep your account in good standing.
  • Interest: The charge you pay for borrowing money if you don’t pay your full balance on time. Interest rates are shown as APR (which stands for “annual percentage rate”) and are calculated based on creditworthiness.
  • Credit score: The number calculated by lenders and credit bureaus based on your spending and payment history. When you pay back a loan on time and in full each month, lenders see you as responsible, or as a good risk. The higher your credit score, the easier it is to get a loan, plus the interest rate will probably be lower and your credit limit is likely to be higher.

Explore more about credit cards

Learn more about applying for a CEFCU credit card and explore these resources that help answer common questions about credit cards and building good credit:

►How do credit card payments work?

►What’s the best first credit card for me, and how do I get started?

►How do I use a credit card so it helps my credit instead of hurting it? 

►What happens if I can’t pay my credit card, and how bad is credit card debt, really?

►Are credit card rewards actually worth it, or is cash back better?

Reach out to CEFCU to learn more.