Experts say that the average American should get their hands on their first credit card by the time they turn 19. Maybe this is because almost a third of Americans say they make no purchases using cash during a typical week, according to the Pew Research Center.
If you’re thinking about applying for a credit card for the first time, there are some things that you should keep in mind while you’re in the process of doing it. These credit card first-time tips will help you avoid racking up a bunch of debt and doing damage to your credit score right from the start.
Here is everything you should know about getting your very first credit card and putting it to good use.
Begin by Looking Around at Your Credit Card Options
One of the first things you’re going to find when you’re looking for your first credit card is that there are so many options out there. From credit cards for people with no credit to student credit cards, you’ll have dozens of options to choose from.
Assuming you’re on the younger side, you may struggle to qualify for a credit card at first since you don’t have a credit history. Part of the reason why it’s a good idea to get a credit card at a young age is to build your credit history up.
A lot of times, younger people opt to go with secured credit cards. These credit cards require them to put down a small security deposit before they’re able to get access to a card.
If you’re able to qualify for an unsecured credit card, that’s great. But if you’re not, there’s nothing wrong with starting off with a secured credit card that will help you establish a good credit score while learning how to use a credit card.
Try to Find a Credit Card With a Low-Interest Rate
Whether you decide to go with a secured or unsecured credit card, one of the goals you should set is to find a card with a low-interest rate.
The interest rate on a credit card will determine how much you pay in fees on your purchases every month. The higher the interest rate, the more fees you’re going to have to pay to your credit card company.
Because the credit card industry is so competitive, credit card companies are always competing for customers. One of the ways they attract new customers is by offering low introductory interest rates to them.
Take advantage of this by shopping around for the credit cards with the lowest interest rates attached to them. You should be able to find one with an interest rate that you feel comfortable with.
Consider a Credit Card That Offers Rewards
Credit card companies do more than just offer low-interest rates in an effort to drum up interest in their cards. They also offer all kinds of other rewards to those who sign up to get a card through them.
Reward credit cards can help you earn things like:
- Airline miles
- Hotel rooms
- Gift cards
If credit card companies are willing to give you rewards for using your credit card, why not take full advantage of it? You can pay for things that you would normally pay for in cash with your card and then pay the card off to get what amounts to free rewards.
Make Small Purchases With Your Credit Card
When your first credit card arrives in the mail, you should not jump right online and use it to order a new TV, a video game console, or that pair of sneakers you’ve been eyeing up for months now.
Instead, you should start off slow and make small purchases with it. Ideally, these purchases should be purchases that you would normally have to make with cash anyway.
Use your credit card to pay for things like:
- Recurring payments (auto insurance, subscription services, etc.)
You can make these kinds of small purchases and then pay your card off quickly to avoid taking on too much debt at once. It’ll show that you can be responsible with your credit card and help your credit score in a big way.
Keep an Eye on Your Credit Card Balance
Throughout the course of a month, you should check your credit card balance on a regular basis. In a perfect world, you should download the app for your credit card and take a look at your balance every day.
By doing this, you will get a feel for how much you’re spending with your credit card. You’ll be less likely to overspend with it when you’re looking at your balance each day.
You’ll also be able to spot fraudulent charges on your credit card as soon as they’re made, as opposed to not finding them for a few days or even weeks. Credit card fraud affects more than 30 million Americans every year.
You’ll feel like you’re in complete control of your card and the charges made on it when you look at your balance every so often. You also won’t forget to pay your credit card bill when you check your balance all the time.
Schedule Credit Card Payments Every Month
One of the worst things you can do when you get a credit card is miss payments on it. You should not miss a single credit card payment under any circumstances.
Your credit card company isn’t going to care if you missed a payment because you simply forgot to do it. In their eyes, they’re not going to see you as a responsible credit user when you miss payments. They might even report you to the credit bureaus if you miss payments too often.
Fortunately, it’s easy enough to schedule credit card payments at any time during the month. Your credit card company will often send you your bill about a month in advance, giving you tons of time to pay it.
When you know you’re getting close to your credit card’s due date, schedule a payment for it. This will ensure that you don’t forget to pay it and get hit with unnecessary late charges.
Request Credit Limit Increases on Your Credit Card Over Time
When you receive your first credit card, it’ll have a low credit limit. Most credit card companies start first-time credit card users off with $500 or $1,000 limits.
But your credit card company can increase that limit any time they want. If they see that you’re doing a great job of making payments on your card, they might increase your limit after just six months or a year.
You also have the right to contact your credit card company and request a credit increase. Even if you have no plans to make large purchases with your credit card, additional credit will send your credit score skyrocketing.
You shouldn’t request a credit limit increase too soon. But if you’re still at the same limit after about a year and you’ve made all of your payments on time, it’s not a bad idea to kick the tires on a credit limit increase with your credit card company.
Monitor How Your Credit Card Affects Your Credit Score
According to a survey conducted a few years ago, about 25% of people under the age of 30 don’t know what their credit score is. Don’t let this be you!
Your credit score is what’s going to be used to determine whether or not you qualify to buy a house or a car. It’s also going to be used to determine whether or not you’re offered a job or a lease on an apartment in some cases.
With this in mind, you should monitor your credit score over the years and keep tabs on where it stands. You should be especially mindful of doing it when you get your first credit card.
It’s very easy to get a copy of your credit report. You can do it online within just a few minutes, and it doesn’t cost a thing.
Take the time to check out your credit report early and often to find out what your credit score is. This is one of the credit card first-time tips that will continue to benefit you well into the future.
Use These Credit Card First-Time Tips to Stay Out of Debt
The average American has almost $6,000 worth of credit card debt. Many people develop bad habits with credit cards early on and aren’t ever able to shake them.
You can avoid finding yourself in this scenario by utilizing the credit card first-time tips found here. You can keep yourself out of debt and become a responsible credit card user right from the beginning.
Learning how to use a credit card will also work wonders for your credit score. You’ll be able to qualify for better installment loans over time and put yourself into a great financial position.
Take a look at these recent articles to learn more about personal finance topics: