How To Use Your First Ever Credit Card
Saturday, May 7, 2011, 2:00 AM | 1 Comment
Millions of folks will be out of school and college this year. Many would get jobs right after graduating while others may have to wait longer. If you are one of the folks who do get a job, you will start paying back your debt if you borrowed money for your education. Along with repaying debt, one of the most important things you can do in your financial life is to start working on creating and developing your credit history.
Many students may already have credit cards while they are still in their respective educational institutions. They may have never cared how they used their credit card. Most students at that age don’t have a clue how to behave in their financial lives. They are as ruthless as they can be with their credit cards. That’s why when they get out of their educational cell, many are already drowning in credit card debt – up to their neck.
After Graduation…
Now that many have good jobs hopefully in the field they went to school for, it’s time they should start working on their credit history. A first credit card can be exciting, tempting, and intimidating. If you are getting your first credit card, here are some ideas to keep in mind. By following these points, you may be able to start using your credit card smartly and more efficiently. Using credit card is serious business.
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When the issuing company sends you credit card, it is trusting you with its money, and for your convenience, it gives you at least a three week time to act responsibly and pay your bill before the due date and in full.
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When you go to a store, it may be promoting its merchandise and will ask you to open a credit card account with them to get a discount. Avoid the temptation of getting a second or third card.
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Because you are a first-time credit card user, start with lower credit limit. Some experts say $1,000 should be the maximum.
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Start getting into the habit of paying your bill in full each month before the due date to avoid late fee and other finance charges.
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Never think for a moment that when you purchase with credit card, it’s your money you are buying with. No, it’s not your money. You are renting the money for three weeks and you must return it to its original owner within the mutually agreed upon time.
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Paying your bill on time will help you create a good credit history slowly but surely.
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Initially you may use the card for emergencies. Think of it as your convenience card and not a borrowing means. Start off slowly. Keep using cash, check cards if you have them, and regular checks for most purchases. You need to get comfortable with the card.
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Never let others use your credit card. You and you alone are responsible for all charges on your card. Do not let others borrow it or give out the number.
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Get a log in with your credit card company. Using online features, keep track of your use of the card, and compare your records with what shows up on the monthly statement.
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Always keep receipts in a safe place. It takes a day or so that your purchase record comes online. Get into the habit of checking the published purchase with your receipts.
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Breathe in your card. Keep it active. Besides using it for emergencies, use it for small purchases every three or four months just to keep it active. Then be sure to pay off the balance in full before any interest is due.
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Never use your card for cash advances. That’s a big and bold NO, NO. The reason is the interest rate charged for cash advances is usually much higher than the purchase rate, and interest is charged immediately. You don’t get “no” grace period.
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Create a saving and spending plan. Do not let your credit card payments exceed 20 percent of your monthly income. Keep spending lower than your monthly income all the time.
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If having and using a credit card turns out to be a problem for creating continual debt, get rid of it immediately, or stop using it for a while.
Credit card company is not your cousin…
Remember credit card company is in business to make money off of your purchase. It may be doing you a favor by giving you grace period of three weeks to pay it back. Keep these points in mind when you use credit card:
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Many folks don’t recognize the fact that the credit card issuer is in the business of making money any which way it can. Don’t start filling up its bellies with interest on long-term balances. More often the rates it charges are relatively high.
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You need to analyze how you are going to use your credit card. Choose a card that fits your needs. First-time users should probably find a card that has low or no annual fees and low interest rates.
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If you are not going to use your card much, the benefits such as rewards for air travel or cash back will not compensate for the fees usually found with these types of cards.
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You use the card for your convenience and to build a good-to-excellent credit history. Those with good records usually find that getting credit is easier, and they often qualify for lower rates on their borrowing.
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Be very discreet in using your card. Whenever you use it, never charge more than 80% of your credit limit in a month. Remain very low and make it a habit to live within your means.
In a Nutshell
Don’t just apply for a credit card the first application you see in your mailbox. Investigate the details of the card thoroughly. Be sure to understand all the fees and how interest charges are calculated. Read the fine prints. Call the company for details if you feel you don’t understand certain aspects of the card.
One Response to “How To Use Your First Ever Credit Card”
By Jack on May 8, 2011, 10:59 am | Reply
Great Article. It contains some really great advice that I wish I had learned way back when I got my first credit card my 3rd year in college. I was one of the students already horribly in debt by the time I graduated.