Simple Tips for Managing Your First Credit Card

First Credit Card

First Credit Card

Getting your first credit card is an exciting time, particularly for a young person. You suddenly have the ability to buy items whenever you feel like it, even when you don’t have the cash available. You can also take advantage of online shopping more easily.

Before you rush out and start madly using your credit card, there are a few simple tips to help you manage this particular financial tool. Because if you can’t manage credit cards well, you will quickly wind up with a lot of debt that builds very rapidly.

Can you pay off the balance within a short amount of time?
Before you make large purchases on the credit card, consider how long it will take you to pay the card off. If you are about to wrack up a lot of debt that will take you many months to pay back, remember that you will be incurring a high interest rate. Purchases of that size are usually better made through a personal loan or savings. A credit card should be used for short term purchases.

Consider what kinds of purchases you are making
Are you using the credit card out of necessity or just for convenience? If the credit card is the only way you can survive through the month, you might have long term financial issues building.

Is this card good value for money?
Sometimes consumers simply obtain a credit card by chance, because their bank decided they were suddenly eligible. You should read the fine print and determine if the credit card is actually good value for money. Even though it’s the first time you will be getting a credit card, you still have options and can check competitors for their value for money. Sometimes loyalty programs and rewards programs offer good value for money, but often the annual fees for these programs are exorbitant. Make sure you get the right card for your spending habits.

Keep records of transactions and check statements
Since this is your first time having a credit card, you may not be familiar with the rigor required to handle the card. You will need to check your credit card statements to make sure they are for the correct amounts. You should hang on to your receipts from stores to make sure the amounts match up.

Consider getting more affordable debt
If you find yourself carrying debt on your credit card for longer periods, talk to your bank about getting a personal loan. You can obtain a better rate of interest compared to the credit card.

Don’t immediately accept a balance increase when offered one
If the bank sends you a letter suggesting you can have more credit, really think before accepting the offer. You need to read the fine print of what they are offering and you need to consider the possible ramifications for your financial future of carrying the expensive credit card debt.

Understand how much you can safely spend
Consider how much debt you can easily repay each month. When making purchases with the credit card, always keep in mind what you can afford to pay back.

Understand fees and charges
Some credit cards have complex charges and fees. Some of those charges only kick in when you have missed a minimum monthly repayment, while some fees are annual or monthly. Understand your credit card’s limitations.

Know you minimum interest free period
Some credit cards have a set number of days where purchases will not be charged interest. So if your card has a 60 day interest free period, if you can repay the amount within that time, you escape expensive interest costs. By understanding the interest free period, you can save a great deal of money.

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