Emily Baisden is a personal financial counselor and an adjunct instructor in the University of Northern Iowa's College of Social and Behavioral Sciences. The following information is featured and first published on WalletHub.com 

Should everyone have at least one credit card?

There can be benefits to having a credit card, but credit cards can also carry risks. Benefits of using a credit card can include protecting your money (in a checking account) from temporary holds when buying gas, renting a car, reserving a hotel, or purchasing a plane ticket. Credit cards can be a useful tool in a true emergency, but it is important to know the potential pitfalls. While cash back rewards (usually 1.5–5%) and points incentives can often be useful when making planned purchases, the interest rates (typically 14–28% APR or annual cost) often exceed the benefits of those cash back percentages. Using a credit card is borrowing someone else's money, and if you do not pay off the balance every month, the cost of borrowing someone else's money is paid as interest. Know yourself: if a higher limit means you are likely to spend more money, consider having a credit card only for true emergencies or sticking with cash.

Has it become easier or harder to get a credit card in recent years?

It is usually pretty easy for a credit card application to be accepted. Sometimes, though, it can be a little challenging. If you are denied a credit card, family members may allow you to be an authorized user on their credit cards to help you build credit. Though, when you are on the same credit account, their activity will affect your credit too. If payments are missed or if credit usage is too high, this can negatively impact your credit just as much as it can impact theirs.

If you co-sign a car loan with someone else to help them get a better interest rate, just know that you are legally on the hook with them. If they cannot afford to make their payments, you will then need to make the payments, or both of your credit scores may take a hit.

Are credit cards safer now than before the Great Recession?

Following the launch of credit cards in the 1950s and 1960s came the normalization of debt, which simply does not have to be a normal part of life. The best way to use a credit card is to pay the entire balance off every single month. If you do not pay off the full amount, you will likely pay interest on purchases you make like gas, groceries, vacations, shoes, etc. These are purchases we do not need to pay any interest on. We live in a culture of "more" instead of a culture of "enough". This can impact how much we pay in interest charges versus on items that really matter to us.

Protections like the Fair Credit Reporting Act (FCRA) and the Truth in Lending Act (TILA) provide safeguards for consumers of credit. The FCRA gives you the right to have only correct information on your credit report; any inaccuracies must be removed. Additionally, the FCRA protects information collected by consumer reporting agencies, whereas a consumer report cannot be provided to anyone who does not have a purpose specified in the Act. The Truth in Lending Act protects you against inaccurate and unfair credit billing and credit card practices.

What tips do you have for someone who is applying for a credit card?

You are probably opening a credit card because you want to build your credit. If you have applied for credit cards but have been denied, the credit card company must inform you of the reason. Usually, a credit card denial is because a person has not established much credit history or because it has already taken multiple negative hits. Consider a "secured credit card" as a surefire way to obtain a line of credit. With a secured card, your credit card is essentially "secured" by your own money, like a pre-paid credit card. Generally, after a year of making on-time payments, the creditor releases your money back to you and converts your card to one that might earn cash back rewards or points incentives.

The most important factor in building credit is to pay your credit card bill on time every single month! This accounts for 35% of your credit score. If a payment is over 30 days late, your credit card company will report the delinquency to one of, if not all three, of the credit bureaus (Transunion, Equifax, and Experian). Every 30 days that you continue to be late on the payment, the number of reported days late increases: 30, 60, 90, etc. Generally, after up to 6 months of non-payments, your creditor can sell your debt to a collection agency, which can stay on your credit report for up to 7 years.

The best way to use a credit card is to pay off your balance in full every single month, no matter the limit or the interest rate. There is a huge misconception that we should "carry a small balance in order to build credit," but I am here to tell you that this is simply not the case. I think the misconception is often confused with the impact of your credit utilization.

Credit utilization is the next biggest factor (30%) in building your credit, which measures your balance compared to your limit. When your credit card statement comes out, the credit card company sends the information to the three bureaus mentioned above. This measures how much of your credit card you are using. If your utilization is less than 10% of the limit when your statement comes out, this is a good place to be. Then, pay it off. If your balance exceeds 30% of the limit, this is considered too much. Even if you paid off the full balance before the due date, the utilization was already measured that month as too high. This negatively impacts your credit. Often, higher utilization makes it challenging to pay off in full every month, which can sometimes lead to paying high interest rates.

Another portion (15%) is calculated by your total length of credit card history. This is often a patience game; as more time passes, the longer your credit history becomes. Closing older lines of credit can shorten your credit history and lower your credit score. Smaller portions of your credit score are calculated based on applying for new lines of credit (10%) and your credit mix (10%). Generally, it is best not to apply for new credit too often within a short period of time. Creditors also like to see multiple types of accounts, like installment loans (mortgage, vehicle, and student loans), accompanied by revolving credit (credit card).

Are consumers good at picking credit cards?

It is ideal to pick a card or cards that you will benefit from. Cash back for groceries, gas, restaurants, and everyday purchases—things you normally buy every month—can be beneficial. The most crucial point is to pay off credit card balances every month and not charge more than you can afford to pay off. Travel cards offer perks and rewards, but you must pay attention to any annual fees. If the annual fees are more than the benefit you receive, you might consider closing the card, even if it means your credit might take a small hit by shortening your credit history. As long as you are not going to finance a large purchase (a car or a house) anytime soon, it is ok to let time pass to reestablish your credit, with the benefit of saving money on annual fees.

What are the biggest pitfalls?

Know the "grace period." This is an especially important time frame to know. The grace period is the time between when your statement comes out and the due date. If you pay the full balance off during this time, you do not pay a cent of interest. However, if you only pay the minimum payment and exceed the grace period, you will have a part of your credit card balance rolling into the next billing cycle. This causes you to pay interest on past purchases and on future purchases. Credit card companies want you to pay only the minimum because that is how they make money. The best way to use your credit card to build your credit is to keep your reported balances low. Keep your balance at less than 10% of your credit card limit when your statement comes out, and pay your cards off completely every month before the statement due date.

There is a huge misconception that we should carry small balances on our credit cards in order to build credit, and that is one of the biggest pitfalls I see. This is simply not how credit is calculated. Rather, the utilization rate, which measures how much you have spent on your credit card compared to the limit, is what impacts your credit.

Know your limits. Sometimes, the higher the credit card limit, the more we spend. Know yourself. If you know that having a $10,000 credit limit means you will end up spending $10,000, then consider decreasing your limit. Even if this affects your credit utilization, the cost of paying interest on $2,000 vs. $10,000 may be significantly less.

Beware of consolidation loans, credit repair agencies, and debt relief and settlement companies.

Another pitfall when it comes to credit is seeking a lower monthly payment. While this can be appealing, and sometimes we just need extra cashflow, really consider how consolidating debt affects your long-term financial situation. With a consolidation loan, you take out new debt to pay off old debt, often at a higher interest rate because your credit has likely been affected by high utilization rates for taking on too much debt in the first place. With consolidation loans, you still owe the same amount; you just now owe it to someone else, which usually results in higher interest rates than you may already be paying. By wiping away credit card debt with a consolidation loan, sometimes it can be enticing to start using credit cards again, even with the best of intentions. Consider why you were in debt in the first place. If overspending behavior is the culprit, unless you resolve this overspending behavior, it is likely that you will start using the credit cards again and end up owing more money than you would have initially.

Credit repair companies claim they can help you improve your credit for a fee, often a large fee, upfront before any services have been performed. You do not have to pay anyone else to improve your credit. By following the steps in this article, you are already on your way to improving your credit. Pull your free credit report and you can see if you have any delinquencies or collections accounts that need to be resolved. Paying your bills on time, keeping your credit utilization low, and being patient to allow time to pass to build credit are well within your scope of abilities to build or fix your credit on your own.

Debt relief companies advertise ways that they can help you resolve your debt by paying less than you really owe. This formal arrangement is one where you agree to stop paying your creditors. Instead, you put the payment you would have made into a "savings account" or an "escrow account" with the debt settlement company. After months have passed and multiple delinquencies are reported on your credit report, the creditor will sell your debt to a debt collection agency for pennies on the dollar. That is when the debt settlement company steps in to attempt to settle your debt for less than you owe. Debt settlement is often a lengthy process because you have to accumulate enough money for the collection agency to agree to settle. All the while, any account in collections continues to destroy your credit until it is resolved or until 7 years have passed for the account to be removed from your credit report.

Better alternatives to consolidation loans, credit repair agencies, and debt relief and settlement companies are to either set up a DIY debt payoff plan through a free tool like PowerPay or seek help from a non-profit credit counseling agency. A Debt Management Program offered through a credit counseling agency can be a helpful tool to pay off debt faster. The credit counseling agency negotiates lower interest rates with countless creditors, reduces monthly payments, stops late and over-limit fees, and "re-ages" your accounts so they can report you as current on your credit report if they are delinquent. You can find non-profit credit counseling agencies locally, or you could visit the National Foundation for Credit Counselors or GreenPath

Consider how you want debt to fit into your future. Remember, paying any kind of debt is like paying your past self. This can mean less money available for saving and investing for your financial stability and your future self.