Sound Advice For First Time Credit Card Users

If you are just entering the world of credit cards, there is important information you will need to know in order to manage your credit and your finances effectively.  Establishing good habits and a good credit history now is the foundation for a solid financial future.  Applying for a credit card in your own name can help you establish a sound credit history and will be a valuable asset in applying for a loan for a home, new car, or getting a new job or apartment.  In addition, there is no safer way to make purchases online or over the phone than with a credit card.

Along with the benefits of having credit cards, comes added responsibility.  If you misuse your credit cards or fail to take responsibility for your spending habits, you could end up in serious financial trouble.  Learning how to choose the credit card that is right for you is your first step.  There are numerous credit card offers from which to choose, and it can be confusing to know which is the best one for you.  Do not choose a credit card simply because of a low introductory rate or generous rewards.  A low introductory rate will increase sharply when the introductory period is over, and many times these types of cards have annual fees and additional costs that are not made clear in the initial offer.

Know the terms of your contract with the credit card company.  Interest rates and late fees can cause your balance to rise considerably and making the minimum payments will not help you pay off your credit card debt.  If you make a lot of purchases with your credit card, it will be necessary for you to pay your entire balance each month if you want to avoid additional fees.  Some credit cards raise your interest rate if your balance exceeds a certain amount, and will charge you numerous late fees and other miscellaneous charges if you exceed your credit limit, even if the reason you are over your limit is due to fees and penalties.

You should know exactly when you will be billed each month and prepare to send your payment in several days before the due date.  Late payments will result in additional fees and could reflect badly on your credit report.  Even if you plan to make your payment online, plan to do so at least 5 business days before your bill is due to avoid any possibility of late payments.   It is very tempting to use your credit card for cash advances.  You should avoid cash advances except in the case of emergency.  Cash advances generally come with a higher interest rate than regular purchases and you will be charged an additional fee for each cash advance.  Even if your interest rate is relatively low, the rate you are charged for amounts resulting from cash advances can be significantly higher.

Be very careful about how and when you use your credit cards.  Never loan your credit card to friends and make sure you protect your card at all times.  Identity theft and credit card fraud are major problems.  You will need to take the appropriate safety precautions to avoid either of these situations.  When your monthly statement arrives, make sure you have kept all of your receipts and check your receipts against your bill.  If you find any errors, report them immediately to your credit card company.  You can learn to manage your credit wisely by practicing good credit habits now.  Credit cards are almost a necessity in our society, but in obtaining credit you must learn good spending habits and make smart financial decisions.

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