Congratulations! You have decided to take the next big step towards building loans. So that you can continue to do this in a positive and responsible manner, we go through the many do’s, don’ts, tips and tricks on how you can successfully manage your first card and use the associated advantages.
Determine your personal rules for your credit card
Do you only use this card for emergencies? Traveling expenses? Car repairs? Shopping spree while shopping? Refuel gasoline? Determine your personal limits before starting regular use. Winging it is an option – but that’s not something you want to start out without rules or personal boundaries. While you are familiarizing yourself with how it works, first add small purchases such as gasoline or groceries. You want to make small purchases that you can easily pay off before the end of each payment cycle.
Depending on the type of credit card, many offer interest-free promotions for at least 12 months. While it may seem tempting to spend as much as you can and cash out at a later date, this is a habit that you shouldn’t develop. For example, to build a positive credit history – determine which recurring expenses you can pay on time. Let’s say you spend less than $ 100 each month. Make sure you make a full payment on or before the due date to help establish solid financial habits.
Use your credit limit healthily
Many people understand the notion that not having credit available is not ideal and that using a large amount of credit is not good. It is imperative that you establish some basic rules and adhere to them as much as possible. The ratio of your total credit limit to the credit can be defined as the credit utilization. Let’s take a real-life example. Your total balance is $ 10,000 and you’ve used half – that’s $ 5,000. Based on this current scenario, your loan utilization is 50%. Ideally, you want to keep this number below the 30% threshold. I know what you’re thinking – why if this is the credit limit I’ve been given? Using a fraction of what you have at your disposal gives credit card lenders the peace of mind that you can make timely payments and exercise discipline every month.
As your credit utilization increases over time, using the total amount awarded to you can negatively affect your credit score. To prevent this from happening, it is important to ask yourself: is this helping or hindering your financial journey? Also, pay very close attention to your posture when spending. Do you consider yourself an impulsive donor? Do you tend to make money decisions when experiencing any kind of emotional pressure? Lenders of all types want to be reassured that you have the discipline and willpower to meet all credit obligations, regardless of your financial circumstances.
Redeem your rewards
Depending on the type of credit card you have, you can earn points that will be redeemed over time. Travel rewards, discounts or credits towards your credit are just a few options that may be offered to you. Visit your lender’s website to find out and keep up to date with all of the benefits available to you. Don’t forget to download the Mint app and plug in your new card for balance and card information at your fingertips.
Communicate with your credit card provider
In the event that you run into financial difficulties in the future, please make this a priority as soon as problems arise. Often times it can be in your favor to explain personal mishaps while suggesting sensible solutions. Remember, avoidance is not acceptance. Out of preparation, make it a priority to familiarize yourself with the terms and conditions of your credit cards. When it comes to finance, many of us are not very interested in disclosing personal information (especially those with whom we have not established a relationship) – however, when doing so can help ensure that your creditworthiness is not compromised; it is better to be open and honest! Being proactive not only offers leverage, but can also ultimately guarantee cheaper solutions.
Make yourself familiar with all underlying fees
When you get your first credit card, it comes with a record that includes most, if not all, of the terms and conditions. While you don’t have to read through the fine print in a day or session, it is important to read this material shortly after the card in hand. Break down section by section so you know exactly what is available to you – and write down things that could potentially harm your credit. Also, check the company’s website for the most up-to-date information. If you have any questions, don’t hesitate to contact customer service. They are available for any concern and should be able to quickly resolve any issues you may have. Be sure to check whether the credit card has annual fees and familiarize yourself with the interest conditions after the interest-free period has expired.
Avoid cash advance options
It can seem like sweet business to take advantage of the cash advance option when you are in a crisis. However, there are so many fees and intricate details that can leave you with regret, frustration, and confusion. It is best to find another alternative – any option offered by a lender is just that, an option. You don’t have to redeem it. Remaining tax responsibility means managing your money healthily, but also knowing when offers are of no use to you or your financial well-being.
Check your purchases regularly
With so many ways to view your account information, take the time to review your credit card statements and / or your charges online. Not only does it check that every purchase is valid, but it also helps you see exactly where and how you manage your card. If something doesn’t seem correct, contact your lender right away to get it fixed as soon as possible.
Marsha Barnes (17 posts)
Marsha Barnes is a finance guru with over 20 years of experience committed to empowering women worldwide to be financially successful. Financial literacy and education are a passion for Marsha, providing practical information for clients that will build their overall confidence in their personal finances.