You just got your first credit card. Congratulations!
That piece of the shiny metallic card provides you with great purchasing power. But with great power comes great responsibilities.
What a common line we here from an all-time favorite superhero comic book. But such line in a fictional story holds so much truth in the real world.
Your first credit card gives you many great opportunities. It allows you to increase your purchasing ability, gives instant access to credit in just a swipe of the card and helps you build your credit standing.
A credit card can help you a lot. However, not being careful on how you use it will also leave your credit standing in ruins.
We know how thrilled you are to finally use your first credit card. Hold your horses just a little bit. We want to help you make this right. We all know how we can get carried away when we get something new. How much more a credit card.
Here are things you need to know as a newbie that may help you make the most out of your first card.
Always Read the Details
Owning a credit card is a big financial move. You have to have a full understanding of its details.
Make sure you read about the card’s terms and conditions before using it. In fact, even before applying for such card, you should already have read about it.
The great thing about credit cards now is that the law requires that the interest rate and fees should be printed clearly. This makes it more readable and understandable for the credit card holders. Go over the whole agreement and do not skip lengthy paragraphs. You have to have a good grasp on how the interest rate applies and how it is being charged. Moreover, you have to know what other fees you will have to pay when you use the card.
Do not Miss Credit Card Payments
Missing payments is the last thing you want to do.
If you purchased something using your credit card, the least you can do is make minimum payments each month. Not being able to pay your credit card dues will not only stack up your debts, it will also increase the interest you will need to pay in the form of penalty interest rates.
Moreover, there are also late fees to pay if you miss payments. And if you’ve missed one too many payment dues, it will have a severely damaging impact on your credit standing.
You also have to bear in mind that just making minimum payments is not enough. Try your best to always pay as much as possible, the soonest time possible. Remember that as long as you have a balance on your statement, the interest rate may apply on it.
If you cannot afford to make extra payments, the next best option is to make full payments on time each month.
If you are diligent in making credit card payments each month, this will create a positive impact on your credit score. For someone who is still trying to build his/her credit, this should be your goal.
As your credit score improves, so do the opportunities that come knocking at your door. With an excellent credit score and a clean credit history, you may be able to qualify for a mortgage loan or a auto financing.
Always Check Your Statement for Errors
You do not want to pay for fraudulent charges. If you feel suspicious, call your credit card provider immediately. Fraud does not only put you in financial risk, it can also have a negative effect on your credit score if not fixed.
Errors in your credit card statement needs to be reported immediately so it can be scrubbed out. Remember that it just does not disappear right away the moment you call in. They will have to investigate on it first and that will take time. It will help save time if you act promptly.
Take these tips by heart when using your first credit card. If you do not have one yet and are planning to get one, make sure you do your research about it. It is best to compare different credit cards and not just settle with the first offer. Maximize the benefits by knowing what credit card suits you best.