Considerations When Opening and Using a Credit Card Amid Inflation and Rising Interest Rates

If you are in the market for a credit card, but feel you need to know more about their benefits and how to choose one that best fits your needs, you are not alone.

Credit card selection and best practices for using them wisely can initially be intimidating and difficult to grasp due to the multitude of options. And with inflation’s grip on the economy and rising interest rates, it’s important to know what you are signing up for, how you can use a card to work for you, and how to protect your credit once you’ve opened an account.

Consider these factors when selecting and using a credit card.

Using Rewards to Maximize Your Credit Card Benefits

The popularity of rewards credit cards has significantly increased in recent years, whether it’s cash back, airline miles, or hotel points—consumers are doing more with the benefits of their rewards cards.

Many credit cards offer cash back options that give you a percent of your daily purchases back, which is especially helpful during inflationary periods like we are experiencing now. For example, WSFS offers a Cash Back Visa card that gives you 3% cash back on groceries, 2% cash back on dining, and 1% cash back on all other purchases.

Getting cash back on your credit card purchases can help lessen the impact of inflation, helping you pay your statement at the end of the billing cycle or transfer that cash into your checking or savings accounts.

Connectivity and Convenience

Advances in the connectivity and convenience of credit cards, like contactless and digital payments, has spurred different payment options like Zelle®, Venmo, PayPal, or Cashapp, or depending on the phone you have, you can use Apple Pay, Samsung Pay, or Google Pay.

These payment apps and methods have allowed consumers to feel more secure while shopping online and paying in person because they can quickly pay by tapping their card on a terminal or they don’t even have to take their card out of their wallet.

Feel Secure in Your Spending

The latest fraud trends can make almost anyone vulnerable, and the risk of someone obtaining your credit card number or hacking into your account is real.

A benefit of using a credit card versus a debit card, where the money is coming straight from your bank account, is that credit cards can provide you with more security and zero liability.

If you find a charge you don’t recognize, your credit card company can remove the charge from your statement while they investigate, giving you the peace of mind that you can still make the everyday purchases you need to in the meantime.

Be sure to help protect yourself by keeping track of where you use your credit card, avoid using it on suspicious websites or those without a security certificate, and regularly check your transaction history to ensure nothing is out of the ordinary.

Managing Your Credit Card(s) the Right Way

While credit cards are convenient and reliable, it is important that you pay your statement balance in full every month.

Spending more than you can pay off by the end of your billing cycle can lead to credit card debt.

As the Federal Reserve raises the prime rate, credit card interest rates, or the Annual Percentage Rate (APR), also go up. So, if you do not pay your full statement balance, and/or if you have multiple balances running, you will end up paying more in both the short- and long-term.

Getting into credit card debt can affect your credit score, which can negatively impact your ability to get a loan for a big purchase like a house or a car. Building your credit and having a high credit score comes from not only using your credit card but using it wisely and not carrying revolving debt.

If you are having trouble paying off your card in full each month, it may be time to fine tune your spending habits and assess what recurring charges you can cut off.

When opening a new card or transferring a balance to pay off debt, look for a credit card with a low or zero interest introductory period to allow you to pay off debt quicker or adjust to using a credit card and developing good spending habits.