Tips to Successfully Manage Your First Credit Card
Thinking about getting your first credit card? Follow these tips to make your first credit experience a step toward a strong financial future.
Choose your first card wisely. All credit cards are not created equal. It's important to know your card's three key terms: APR, fees, and rewards. APR stands for annual percentage rate, and it tells you how much interest you'll be charged for the balance you carry from month-to-month. The lower the APR, the less you'll pay in interest on your card. Some cards have fees such as annual fees, late fees and cash advance fees. Look for a card that has no annual fee, or a low annual fee, and pay attention to other fees before using your card. The last term to know is rewards. Rewards can often be a fun part of owning a credit card. Some cards offer cash back or other incentives for using them. Often rewards have limits or expiration dates, so look at the terms carefully when choosing a card.
Once you have chosen your card, it's time to start using it the right way.
Pay your bill on time every month. Not only do many cards charge a late fee if you miss a payment deadline, but it will also damage your credit history. Create a reminder in your calendar to help you remember to pay on time.
Pay more than the minimum balance. While it may be tempting to pay only the minimum balance on your card, doing so will extend the time it takes to pay off any balance. That means you'll be paying more in interest than if you made a larger payment sooner.
Limit your monthly spending. Spending to your card's limit can be dangerous and may hurt your credit history. A good rule is to keep your monthly spending at less than 30 percent of the card's limit to show creditors that you can use credit responsibly.
Are you ready for the financial responsibility of your first credit card? SCCU offers low-rate credit cards to get you started on the path to a strong credit history.