Managing Your Credit Card

Make the most of your financial future

Establishing a healthy financial lifestyle can help you accomplish amazing things. No matter your dreams, knowing how to manage your credit can help you get there.

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Types of Credit Cards

  • A rewards credit card can include a point system or program which allows the cardholder to earn travel, merchandise, cash back or gift cards with their purchases.
  • A non-rewards credit card may have a lower rate; however, this is based on a cardholder’s creditworthiness.

  • A secured credit card is tied to a savings account, so the credit limit is established based on the amount in the savings account.
  • A non-secured card does not require a savings account to secure it and the credit limit is based on the card applicant’s creditworthiness.

  • Some credit cards may have an annual fee, which a cardholder would be responsible for in addition to any interest rate fees.
  • Other credit cards may not have an annual fee for use of the card.

Understanding Credit Scores

FICO® is an abbreviation for the credit score company Fair Isaac Corporation. Your FICO® score is a snapshot of your credit history based on the information in your credit report. It helps lenders determine the risk in giving you a loan.
Learn more about FICO® scores

The factors that determine your FICO® score are:
  • 35% - Payment history: paying your bill on time
  • 30% - Debt to credit ratio: the amount you owe versus your total loan amount or credit limit
  • 15% - History length: the length of time you've had a credit history
  • 10% - Inquiries: any new inquiries on your credit
  • 10% - Accounts: the types of credit accounts you have

The FICO® score range is 300-850. The higher your score, the lower the risk you are to lenders. Your score affects whether you qualify for a loan, the annual percentage rates (APRs) you receive and the terms lenders offer you.
Understand more about the impact

Tips for managing your credit

Paying your credit card bills on time every month is the easiest way to maintain a good credit score. This alone makes up 35% of your credit report.

Keep the total amount you owe under 30% of your total available credit to help improve your credit score. This is also true for individual credit cards; try to keep your balance under 30% of a card's limit.

Download your free credit report from each of the three credit reporting companies — Equifax, TransUnion and Experian — at annualcreditreport.com. Review each one and report any inaccuracies to protect your credit.
Download your free credit report

Ways to manage debt

There are different strategies for reducing debt — such as paying off balances from smallest to largest, or paying off debt with the highest interest rate first. The best way to become debt-free is to establish a plan and stick to it.

One way to simplify getting out of debt is to combine high-interest loans, payments or other debts into a single loan. This could help lower your interest rate, lower your monthly payment and help you become debt-free faster.