Decisions, Decisions…Which Credit Card?

Do you have a store credit card or a credit card with one of the Big Banks?  Most likely, you do. After all, you can’t drive down most streets in America without seeing one of their branches – it’s why they appear to be so convenient. Yes, I said appear. The fact is your credit union will more than likely be every bit as convenient and accessible as the big guys. I know for sure that ours is.

Banks and credit unions offer the same products and services, but have you compared the costs? Most people just accept the “small” fees that banks charge based on what they perceive to be convenient. When you dig deeper, you’ll notice that the fees are anything but tiny, and suddenly things are no longer convenient. These same factors influence consumers who are shopping for credit cards and checking accounts, but let’s focus on the credit cards.

THEY have big budgets, which is why you see them everywhere. With or without celebrity endorsements, the cards follow virtually the same template. Limited rewards. High-interest rates. Fees. Don’t think that your store card is much different because those are often issued by – you guessed it - big banks!

Megabanks don’t want you to shop around for better rates. You are much smarter than that. Sure, the idea of building credit with a store card sounds appealing, especially when they offer you a discount on your purchase. You get to establish a credit history, which will help you in just about every aspect of your life. What’s wrong with that?

For starters…that 30% APR (annual percentage rate) you will have to pay back is…well, wrong! Some would call it usurious. There are no two ways around it – that is an extraordinarily high rate that no one should ever have to pay. Now, you might be thinking that the interest rate is no big deal because you have a pretty small credit limit. Wrong again, friends. That measly $300 - $500 credit limit on your store card is probably going to hurt you more than it will help. How? One critical factor in determining your credit score is utilization. Ideally, you want to have a balance of no more than 30% of the limit. That means when you charge $90 on your $300-limit card, you are already at that threshold. Let’s not forget that some of those store cards can only be used at that one store – that hardly spells convenient to me.

Before you get scared and cut up all of your cards, take a deep breath. Not all credit cards or credit card debt is bad. If it is handled properly, credit card debt can be a huge benefit to your credit score. For an in-depth explanation of credit scores and the credit mix, read this post. To make a long story short, you want to have different types of credit on your report. Revolving debt (like a credit card) is one of several types of debt that creditors like to see in a repayment history. Speaking of credit, those big guys are very quick to turn down those with less than perfect credit scores.  Your credit union is more willing to look beyond the score and focus on the individual who needs the loan. Once again, we at the CUs prove that you are more than just a number.

Here’s more good news -- if you have a store card or a card from one of the big banks, don’t fret! You are not stuck with them forever. As long as you don’t close your oldest lines of credit, you can transfer those high-rate balances to a more affordable card and save money. If you are looking for a card that fits the bill, you have come to the right place. Let’s take a look at the differences between some of the worst cards you can carry in your wallet versus the best card you could carry – the InFirst VISA Rewards Credit Card. Yes, I know I am a bit partial, but seriously, just look at these benefits.

As if all of that weren't enough, if the store closes, you still have to pay your debt! I don’t know about you, but that’s a hard pass from me. I will stick with my credit union where I know they cannot charge more than 18% APR by law and where I am more than just another “customer” who may have to sit on hold forever. Call us today or send me an email if you are interested in our card.                                                                                                                                                   

Ready for the best news of all? You still have time to transfer your high-rate cards to our VISA Rewards Credit Card at either 2.02% APR through 12/31/2021 or 8.50% APR for the life of the balance transfer. You have to hurry, though. This promotion expires on 03/01/2021.

If you have more questions about your credit, debt, or anything else, let us know! We have certified Financial Counselors here to help you free of charge.  Of course, you can always leave me a comment or email me – I’d love to hear from you.                                                                                                                                                                     

Krista Kyte is a personal finance blogger and personal banker with over 18 years of experience in the financial industry. Krista is passionate about helping our members understand their financial situations. She writes tips that will help consumers reach and maintain financial security, and start living the life they’ve always wanted.