Many people know the importance of establishing and developing credit and using it wisely, so they have Well credit.

While there are plenty of tips and resources to learn how to manage credit, reduce debt, and increase scores, the types of credit available to them that are best suited to their needs can sometimes be overlooked.

After all, there’s more to credit management than choosing the right rewards credit card. Indeed, a recent WSFS Bank Money Trends survey found that nearly seven in ten respondents (69%) in the Greater Philadelphia & Delaware area who used a line of credit or personal loan in the past 12 months did so for a major purchase or for do something important to them, like buying a car, buying or renovating a house, or going on vacation.

With just a few simple steps, you can identify your credit needs and the products that are best for you in the short and long term.

Here’s how to get started.

Evaluate the way you use credit cards

This step is crucial. If you already have a credit card with terms and rewards you love, such as cash back rewards for purchases, and can afford to pay off without having a monthly balance, perhaps the best thing to do is. be to stick to it.

If you use your credit card to pay monthly bills, like utilities, make sure the payee doesn’t charge you a premium, which could void any rewards you earn.

As you continue to use and pay off your credit card, you will also continue to build your credit score, which will help you get better rates on other loans when you need them, like a personal loan or line of credit. credit, mortgage, or home equity. line of credit (HELOC).

However, if you are falling behind, take a good look at your spending first and see where you can cut back on your spending. Next, start paying off the revolving credit card debt, starting with the card with the highest interest rate.

Look for flexibility

If you envision a longer-term need, like an unexpected large expense or to consolidate debt, or even a planned large purchase like paying for a wedding, a personal loan or line of credit maybe an adjustment.

Personal loans
are fixed for a fixed amount and repaid over a fixed term at a fixed interest rate, usually lower than that of a credit card, so there are no surprises for the borrower during the term of the loan. These fixed terms provide the ability to manage your debt with guaranteed time frames and costs to pay off what you have borrowed.

Meanwhile, a personal line of credit
gives you the flexibility to borrow what you need when you need it, up to a fixed amount predetermined by your lender. Like a credit card, you only pay interest on what you borrow if it isn’t paid off in full.

If you have periods of fluctuating income or bills and need extra cash to work for a short period of time, a personal line of credit may be a good option. The Money Trends survey found that 65% of regional respondents have used a personal loan or line of credit in the past 12 months to pay bills, indicating the flexibility these credit options offer borrowers.

Other borrowing options

The Money Trends survey found that more than a quarter (26%) of those polled have borrowed money from family or friends in the past year, while another 20% have tried. use the “buy now, pay later” (BNPL) options.

BNPL is like using a credit card, with a few differences.

First, BNPL requires consumers to pay for a purchase in fixed installments, whereas a credit card is revolving and requires only the minimum payment. While it is recommended that you pay more than the minimum on any credit card, if you have a month when your funds are tight, paying the minimum won’t hurt your credit score. Unfortunately, if you miss a BPNL payment, the lender may report you to the credit bureaus, which will negatively impact your score. In addition, BNPL does not help to construct your credit score.

BNPL options can also charge high interest rates or fees if you miss a payment, so make sure you understand the terms of your purchase. Also, keep in mind that it can be easy to lose track of how many BNPL purchases you’ve made, forcing you to accidentally overburden your finances, making planning and budgeting difficult.

Finally, not all retailers accept BNPL as an alternative payment method, and not all BPNL policies are the same when it comes to upfront payments, returns, and built-in fees.

When assessing your borrowing needs, it is important to consider the repayment terms and interest rates associated with the different types of credit products available. No matter what type of credit or loan products you use, have a contingency plan in place to make sure you can pay back what you’ve borrowed.

Speak to your local banker to determine the credit options that best suit your personal needs.

About the author – Shari Kruzinski

Shari Kruzinski is Executive Vice President and Chief Client Officer at WSFS Bank. His career spans over 30 years in the banking industry, including 31 years with WSFS. In her current role, Shari leads the Bank’s Customers division, including customer experience and company-wide customer initiatives. She also oversees the Bank’s retail offices, contact center and retail operations.