A credit card can be a helpful tool in your personal financial toolkit. Opening at least one card and paying it on time helps build your credit history and boost your credit score.
But how many credit cards should you have? There’s not one right answer for everyone. It depends on a few things, including your financial situation, financial goals and spending habits.
Know your spending habits
If you have stable income and can easily pay a monthly card balance, having a few credit cards may be smart. You could use certain cards for daily purchases, like gas or groceries, to help you budget and potentially save money.
Many credit cards offer incentives for rewards, travel or cash back. Loyalty-program credit cards from retail stores often offer points toward purchases or extra discounts.
If you’re starting out in college or career, opening just one credit card might be a good option. You can use it to pay bills from a single source, making it easier to track payments. In the meantime, you’d accumulate a solid credit history by paying the card on time and keeping it open.
Either way, know your financial situation and do your research to find your best credit card options. UMB offers a few credit cards to fit your lifestyle.
Make your credit card work for you
A credit card can help build credit history, boost credit score and offer some perks when used responsibly. UMB encourages our customers to make informed financial decisions. Check out this article for more tips on using your credit cards.
Knowing how your credit card works can help you get the most benefits from using a credit card. Here’s a quick look at how credit cards work:
A credit card isn’t a debit card
A debit card is connected to your personal checking account. Each time you use a debit card to make a purchase or pay a bill, there’s a simultaneous electronic withdrawal from your checking account.
Using a credit card is like taking out a short-term loan. A credit card company approves you to borrow a certain amount of money, and you’ll have to pay it back.
Know your credit limit
A credit limit is the total amount of money you can borrow on your credit card. Your available credit is reduced every time you make a charge. If your credit limit is $1,000 and you make a purchase for $200, your remaining available credit is $800.
Grace periods and interest fees
The credit card grace period is the time between when you make a charge and when the bill is due. Pay your credit card in full by the due date each statement period, and your account won’t accrue interest.
If you pay anything less than the full monthly balance, your account is charged interest. Interest is based on your credit card’s APR, or annual percentage rate.
Understand your credit card bill
Your monthly credit card bill shows the New Balance and the Minimum Payment Due. The Minimum Payment Due is the least amount you can pay by the due date to avoid a late fee. But if you only pay the minimum, your account will accrue interest because you’re paying less than the full amount you owe.
Maintain healthy credit
Credit cards can help you build a strong credit history. But carrying too much debt, making late payments or missing payments can severely hurt your credit. Here’s more helpful information on how to maintain healthy credit.
An APR on a credit card stands for “annual percentage rate.” In simplest terms, an APR is used to calculate the interest you’re charged when you carry a balance on a credit card.
If you pay less than the total monthly balance, a credit card company will charge you interest on your revolving balance and on future advances until the balance is paid in full. If you always pay your total monthly balance, you’re not charged interest.
Credit cards come with varying APRs. Your credit history and perceived credit risk can affect the APR on your credit card. Typically, the higher (or better) your credit score, the lower your APR.
For an in-depth look at credit cards and more, check out UMB’s free online personal finance courses.
You can apply for a credit card a few ways: a direct-mail application, online at credit card company website or at a bank branch. Retail stores often allow you to apply for a credit card in-store with customer service.
UMB offers several options to help you find the right credit card for you. You can apply for a credit card online today.
What you need for a credit card application
All credit card applications require personal information, like your name, address, Social Security number, income and monthly housing payment. A credit card company uses this to research your credit history to determine eligibility and if you’re approved, to determine your credit limit.
Credit history and several other factors are considered before your application is approved. Before you even apply, consider these questions first:
How do credit cards work?
What is the best credit card for me?
How many credit cards should I have?
It might seem frustrating: To get a credit card, you often need to have credit history. But you can’t build credit history if you’ve never had credit (like a credit card or loan).
In this case, a secured credit card may be a good option to help you begin to build or restore your credit score. A secured credit card is “secured” by a cash deposit. Your line of credit, or credit limit, is equal to the amount of that deposit.
Apply for a UMB secured credit card
You can use a secured credit card for everyday items or unexpected expenses. And by making responsible monthly payments, you’ll be on track towards building your credit history. To apply or learn more about UMB’s secured credit card option, schedule an appointment with a personal banker at a UMB branch.
Credit card companies offer a wide range of options, interest rates and rewards. Focus your search for the best credit card for you with these questions:
- What’s my credit history and credit score?
It's important to check your credit history and credit score on a regular basis. Lenders use this score to evaluate your creditworthiness. Each of the nationwide credit bureaus offer free access to your credit report at
annualcreditreport.com
.
Credit card companies offer a credit limit and annual percentage rate (APR) based on your previous credit usage and their assessment of your ability to repay the debt you might incur on that credit limit.
To get an idea of what limit and rates to expect before you apply for a credit card,
know your credit score.
- How will I use a credit card?
Do you want to build or repair your credit? Earn cash back or points for redemption options? Knowing how you want to use your credit card will help make finding the right one easier.
- Am I willing to pay an annual fee?
Usually, credit cards that offer the highest perks also charge an annual fee. If you think the fee is worth it because the card matches your financial goals, then it might be a good idea. There are also many credit cards with little or no annual fees. UMB offers a few different Visa credit cards to fit your lifestyle.
Browse your UMB rewards, check your point balance and more with the reward center. Log in to online banking (first-time users will need to create a user ID and password). Once you log in to your UMB online banking dashboard, you can access your credit card rewards with the below steps:
- Click your credit card account tile
- Near the top of the credit card account page, you’ll see two tabs. Select the Details tab.
- Scroll down to find your rewards point total. Scroll further to find a link to access/redeem your credit card rewards
- Click the link under the Access/Redeem Rewards header
