The Beginner’s Guide to Credit Cards

Credit cards! Can’t live with them, can’t live without them. According to the latest report by the Federal Reserve, there’s a whopping $790 billion in credit card debt in the U.S. On the flip side, though, opening credit cards and managing them responsibly is crucial to establishing your credit history, which impacts your eligibility and rates for large, low-interest loans.

Here’s all you need to know about credit cards.

How credit cards work

When you use a credit card to pay for a purchase, you’re borrowing money from the financial institution that issues the credit card. You’ll repay the loan, in part or in full, at the end of the month when the bill is due. The credit card company charges interest, or a percentage of your balance, which you’ll pay if you don’t pay off your bill by its due date. This number is determined by your annual percentage rate (APR), which refers to the annual cost of borrowing money with your credit card. The longer you carry a balance, the more the amount interest will accrue.

Now, let’s take a deeper look at each step in responsible credit card management.

Applying for a credit card

First, you’ll need to apply for a credit card. If this is your first card, you’re probably best off applying for a secured credit card. These starter cards require you to make a deposit before you can open the line of credit that establishes the loan that’s attached to the card. The deposit will serve as a form of collateral in case of a missed payment or default. Usually, secured credit cards will only offer a modest line of credit. If you make your payments on time, you’ll get the deposit back after a predetermined amount of time, usually eight to 12 months, at which point you can close the account and open an unsecured credit card (which does not require the deposit to serve as collateral).

As you consider your credit card options, look no further than your local credit union. As member-owned cooperatives, credit unions consistently offer credit cards with lower interest rates than credit cards issued by big banks, with the most recent data showing the national average credit card rate at 16.16% APR while Zing’s credit card offers interest rates as low as 12.99%APR*. You can also expect more personalized member service when working with a credit union.

It’s important to note that many credit unions include clauses in their credit card terms allowing them to withdraw funds from the cardholder’s checking or savings account if the cardholder defaults on the credit card payments. When applying for a credit card through a credit union, look for this disclosure in the terms so you are aware of this arrangement if it’s in place.

Using your card

You can use your card to pay for a purchase at any vendor that accepts your card brand (such as Mastercard or Visa). You can charge up to the available credit line that’s associated with your card. However, to keep your credit score high, it’s best to keep your credit utilization below 30% of the available credit. So, for example, if you have a $1,000 limit, you would want to keep your balance at or below $300.

Statements

You’ll receive a credit card statement from your credit card issuer each month. The statement will include the following information:

Summary of all transactions made on the card since the last billing cycle. This includes all purchases, payments, balance transfers, cash advances, fees, interest payments and more.
The balance from the previous billing cycle.
The minimum payment due.
The payment due date.
The number of days in your billing period.
Your credit limit and available credit.
Any available or redeemed awards.

It’s important to review your statement for accuracy and to take note of the bill’s due date so you don’t miss a payment.

Payments

Once you’ve received your statement, you can choose how much to pay. If you pay your entire bill in full by its due date, you’ll avoid paying interest on the charges you made this past month and only pay the cost of the actual purchases. On the other hand, if you only make the minimum payment, interest will continue to accrue on the balance you still carry on the card. If you can’t pay the full balance, you can also choose to pay an amount that falls between the minimum payment and the outstanding balance.

[You might also want to consider automatic payment with us if your card is issued by to ensure you are never late on your payments.]

Building and maintaining a high credit score

Follow these tips to build your credit score and keep it high:

Pay your bills on time.
Pay more than just the minimum payment due.
Keep your credit utilization low; ideally, at less than 30% of your available credit.
Ask for a credit limit increase after nine months of responsible credit card use.
Keep your cards active.

Responsible credit card usage is an important part of financial health. Follow the tips outlined above to keep your score high and enjoy the benefits for years to come.

[* APR=Annual Percentage Rate and is current as of 11/1/2021. All loans are subject to credit approval and verification of income.]

Truth In Savings Disclosure

TRUTH IN SAVINGS DISCLOSURE

Except as specifically described, the following disclosures apply to all the accounts.

Rate Information. The dividend rate, or interest rate, and annual percentage yield on your accounts are set forth on the reverse side. The annual percentage yield is a percentage rate that reflects the total amount of dividends/interest to be paid on an account based on the dividend/interest rate and frequency of compounding for an annual period. For Certificates of Deposit and IRA Certificates of Deposit, the interest rate and annual percentage yield are fixed and will be in effect for the term of the account. The annual percentage yield is based on an assumption that interest will remain on deposit until maturity. A withdrawal will reduce earnings.
Nature of Dividends. Dividends are paid from current income and available earnings after providing for the required reserves. The dividend rates and annual percentage yields are the prospective rates and yields that the Credit Union anticipates paying for the applicable dividend period.
Compounding and Crediting. Interest and dividends will be compounded and credited as set forth on the reverse side. The dividend/interest period for each account is also set forth on our Rate and Fee Schedule. The dividend/interest period begins on the first calendar day of the period and ends on the last calendar day of the period.
Balance Information. The minimum balance required to open each account is set forth. Interest is calculated by the daily balance method which applies a daily periodic rate to the principal in the account each day.
Accrual of Dividends. Dividends will begin to accrue on cash deposits on the business day you make the deposit to your account. Dividends will begin to accrue on noncash deposits (checks) on the business day you make the deposit to your account. If you close your account before accrued dividends are credited, accrued dividends will not be paid.
Account Limitations. The account limitations for each account are set forth in our Membership and Account Agreement
Your account will mature on the maturity date set forth on your account receipt or renewal notice.
Early Withdrawal Penalties. A penalty may be imposed if you withdraw any of the certificate funds before the maturity date or the renewal date, if this is a renewal account.
Amount of Penalty. For Certificates of Deposit and IRA Certificates of Deposit the amount of the early withdrawal penalty for your account is 90 days’ interest for a term of 12 months or less, and 180 days’ interest for a term over 12 months.
How the Penalty Works. The penalty is calculated as a forfeiture of part or all of the interest that have been earned on the account. This penalty applies to earned interest and principal.
Renewal Policy. Certificate of Deposit accounts will automatically renew for another term upon maturity. You have a grace period of seven days in which to change or withdraw the funds without being charged an early withdrawal penalty.
Exception to Early Withdrawal Penalties. At our option, we may redeem the account before maturity without imposing an early withdrawal penalty under the following circumstances:
- When an account owner dies
- or is determined legally incompetent by a court
- or other body of competent jurisdiction.
Nontransferable / Nonnegotiable. Your account is nontransferable and nonnegotiable. The funds in your account may not be pledged to secure any obligation of an owner except obligations with the Credit Union.
FEES FOR OVERDRAWN ACCOUNTS. Fees may be imposed on each check, draft item, ATM card withdrawal, debit card withdrawal, debit card point of purchase, preauthorized automatic debit, telephone initiated withdrawal or any other electronic withdrawal or transfer transaction that is drawn on an insufficient available account balance. The entire balance in your account may not be available for withdrawal, transfer or payment of a check, draft or item. You may consult the Funds Availability Policy for information regarding the availability of funds in your account. Fees for overdrawing your account may be imposed for each overdraft, item or transaction. If we have approved an overdraft protection limit for your account, such fees may reduce your approval limit. Please refer to the Rate and Fee Schedule for current fee information.

Checking Comparison Chart

Compare Checking Accounts

Preferred Checking

Clear Card

Second Chance Checking

Minimum Opening Balance

Suggested opening amount- $25

ID Safe Choice Charge Possible

Yes

Direct Deposit

Accepted and encouraged

Dividends Paid

Privilege Pay

Available after 90 days

Overdraft LOC

Available immediately, with approved credit

ATM/Debit Card

Instant Issue

Shared Branching

Available

Free Bill Payer

Available

Mile High APY

Yes

N/A

Yes

5 Buck Club

Yes