Beginner’s Guide to Credit Card User

As a newcomer to credit, you’ll want to figure out why and how you will be able to utilize credit to reach your goals, specifically credit cards. You may think that you cannot obtain credit cards, thinking credit is only designed for rich people or people with a great credit score.

More often than not, we are not aware that there are different types of credit cards suited to our budget and the lifestyle we have. There are different types of cards that you can refer to for different uses and having a diversified credit portfolio is important. We love Nerd Wallet so we are sharing another link to one of their write-ups here:

The idea behind credit cards is simple: When you use a credit card, you are borrowing money to pay for something. Later on, you must repay what you borrowed. If you take time to pay it back (rather than pay it in full when your credit card statement comes), you’ll be charged interest. The whole credit card industry rests on this basic premise. At CRN we like to teach our clients to use credit cards as a tool to pass money through, rather than viewing them as “extra money”. To some, this may sound crazy from one perspective or the other. I’ve heard some say, “Of course, it’s not extra money”, but others will say, “That is money they have extended to me, and I can use it freely”. The important realization here is that no one in this industry extends money (credit) without an upside for them. The upside for them can be interesting while allowing you to pay minimum payments, a transaction fee to the store you made a purchase with, or many other opportunities which arise if you do not manage credit as a tool to pass money through. They should be used only to show the credit industry how you manage finances. If you use your cards for this reason only, you will obtain and retain an amazing credit file and top-tier credit health.

A basic credit card transaction works like this:

  • Using your card: When it comes to pay, you used your card. If you’re online, you need to enter your card information.
  • The purchase is authorized: The card reader contacts your credit card to make sure your card is valid to authorize the transaction.
  • The merchant gets paid: The bank that issued your credit card sends money for the purchase to the merchant where the transaction took place.
  • You pay: The transaction shows up on your credit card statement, and you repay the bank for the purchase.

These are the comprehensive things you might want to know about how you will use your credit card without suffering from any debt. Know your limits.

For the future building of credit, and/or to get started with an educational course on how to ensure you can use your financial freedom, please fill out a contact form at Credit Repair Nerds of Colorado or message us here and we are happy to help.


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