Dovly 101: Let’s Talk Credit Cards

Credit Cards
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5
 Min read
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April 5, 2021

Getting a credit card and using it responsibly is a great way to establish a credit history. If you aren’t familiar with the basics of credit cards, it’s time for Dovly 101: Let’s Talk Credit Cards.

How Does a Credit Card Work?

A credit card can be a powerful tool. With a credit card in your name, you can borrow against a credit line amount determined by a retailer or bank. This is a form of payment that can be used at stores, restaurants, hotels, transportation, etc. It means you don’t have to prove to the person you’re presenting the card to that you’ll pay back what you’re borrowing.

You’ll get a bill each month that states the total amount you’ve borrowed and the amount you’re required to pay that month. Large purchases can be financed over time and unexpected emergencies handled as they happen.

Benefits of Having a Credit Card

Building a good credit history is one of the biggest benefits of having a credit card, but there are other benefits as well. These include:

  • They may offer perks such as zero interest rate for a period of time, points, or cash back.
  • You have limited liability to pay for fraudulent purchases if your card is lost or stolen.
  • They can be free to use if you obtain a card that has no annual fee and pay back the balance in full each month.

As long as you make your payments on time, your credit card company reports your payment history to one or more of the credit bureaus. This provides proof that you’re a creditworthy borrower. 

Cons of Credit Cards 

For most people, credit cards provide the first step toward building a good credit history, but there are some cons to having credit cards. These include:

  • It can be too easy to spend more than you mean to without realizing it
  • As your debt increases, it can be harder to pay back

If you aren’t paying attention, you may pay a high-interest rate on a credit card, or you may be charged an annual fee. Interest and fees can really add up. You may have a hard time remembering what you’ve already spent and what you have left to spend.

Keeping Your Credit in Good Standing

Once you have a credit card in your name, always pay your bill on time. Late payments can lead to outrageous fees and can also damage your credit. Avoid maxing your cards out and try to keep your credit utilization under 30 percent of the amount available to you. 

Don’t apply for multiple credit cards in a short amount of time since this can also damage your credit. Make sure that what appears on your credit report is accurate, because your credit can also be damaged if duplicate information is reported or if your creditors make mistakes in the information they provide. Dovly’s automated credit repair engine can track, manage and fix your credit. Get in touch with us today to see how we can help you have the best possible credit score.


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