Credit Cards 101

A credit card isn’t spending your own money; it’s borrowing money from the card issuer with an agreement to pay it back. Every purchase adds to your balance, and every payment brings that balance back down. That simple mechanic is the foundation for everything else about using a card well.

The Grace Period Is Your Best Friend

Most credit cards come with a grace period, the stretch of time between your statement closing and your payment due date. Pay your full balance within that window, and you won’t owe a cent of interest, even though you borrowed the money. Carry a balance past that window, and interest starts accruing on what’s left.

This is the single biggest thing that separates cardholders who use credit for free from cardholders who pay a little extra for the convenience.

Why the Minimum Payment Isn’t the Goal

Your statement always lists a minimum payment, and it’s easy to assume that’s a reasonable amount to pay each month. Though a better way to think about it is that it’s just enough to keep your account in good standing, not to help you pay down your balance in any meaningful timeframe. Paying only the minimum on a balance can mean paying it off for years, with interest adding up along the way. If you can’t pay your full balance one month, paying as much above the minimum as you can will always work in your favor.

Know What You’re Paying For

Interest isn’t the only cost worth knowing about. Depending on the card, you might see an annual fee just for having the card open, a late fee if a payment misses its due date, or a foreign transaction fee if you use the card outside the country. None of these are dealbreakers, but they’re just good to know about before you apply, instead of after your first statement.

Start Smart Money Habits

Steering clear of common credit card mistakes and building positive habits goes a long way. Things like getting alerts before your due date so you never miss a payment and making sure to check your statement each month so anything unfamiliar gets caught early add up. Another big one? Treat your credit limit as a ceiling, not a target. Using a card doesn’t mean you have to use all of it.

Choosing the Right Card for How You Actually Spend

Building credit is one of the smartest financial moves you can make, especially if a big purchase like a house is somewhere on your horizon.

At Farmers & Merchants Bank, we offer a lineup of personal Visa^® credit cards built around real lifestyles and goals:

• Platinum or Classic, depending on the level of features and credit line that fits your needs.
• Preferred Points Card or Low Rate Card, depending on whether you’re looking to earn rewards on everyday spending or keep interest costs as low as possible.

If you tend to pay your balance in full each month, our Preferred Points Card lets you turn everyday purchases into useful rewards. If you occasionally carry a balance, our Low Rate Card is built to keep that cost down. Either way, there’s a card here designed to work with your habits, not against them.

Ready to Find the Right Fit?

All of our cards are accepted worldwide at businesses, financial institutions, and ATMs, with 24/7 customer service available at 1-800-367-7576 or online at cardaccount.net. Stop by any Farmers & Merchants Bank branch to apply, or visit our site to see which card fits you best.