First Credit Card? How to manage your credit

Visa Mastercard Amex and Discover

The first time you get a credit card, is really exciting. I remember obtaining my first credit card. It was for the department store Bloomingdales. As soon as I got it, I headed Visa Mastercard Amex and Discoverdown to the mall to start spending on it! About a month later I got my first credit card bill, and that was pretty exciting too….until I saw how much I had spent! I couldn’t even remember half the stuff and I had brought some gifts for friends too! Very foolish LOL. I should never have opened the account without a steady income and a better grasp of Needs vs Wants!

Like a lot of young people, I eventually fell behind and within the first 2 years of having credit cards, my score wasn’t what it should be. I was lucky. I worked for a bank with a great manager and he got me back on track. In this article I’ll go over some tips to help you stay out of trouble with your first credit card!

Its all too easy for someone who is new to credit to fall behind. A credit card can be a wonderful tool for building good credit but the card holder needs self-discipline and strategy.

  1. Say no to using the cash advance feature of your credit card.  If an emergency or a situation requires you to get cash in a hurry, try to find alternatives instead of relying on your credit card all the time.  Cash advance transactions are instantly charged with interest.  Even worse, most issuers impose a higher interest rate on cash advances than the rate applicable to new purchases and balance transfers.  The moment you take out cash from the ATM, you automatically incur APR charges whether or not you pay the full balance on time.
  2. Use your credit line sparingly.  Understanding the concept of NEEDS vs WANTS comes into play here.  Its easy to go over board with a credit card.  It feels like you have an unlimited amount of money.  But YOU DON’T.  If you can keep your balances below 30% of your limit consistently, you will be able to build and maintain good credit. More importantly, the risk of over spending is minimized since it will be easier for you to pay off a small balance.  If you’re planning to use your credit card for a large purchase, see to it that you do not max out or exceed your limit and that you can afford to pay it off quickly.
  3. Review your credit card bill.  Make it a habit to check your monthly account statement before paying your balances.  This is the only way you can be sure that all the charges on your account are correct.  Errors can sometimes occur but if you do not dispute unauthorized charges, you end up paying for debts you do not owe.
  4. Avoid carrying a balance.  If you can pay your balance in full, then do it.  Paying only the minimum due can be tempting as you might want to spend your cash on something else.  However, although issuers accept minimum payment, paying the interest rate month after month can seriously eat into your savings!
  5. Understand the Pros and Cons of the type of card you choose.  If you own a reward credit card, the interest rate is most likely to be higher.  In fact, reward cardholders are strongly encouraged not to leave a balance if they are really after being rewarded.  Otherwise, the money you spend on interest rate fees might be more than the value of your rewards.
  • Also take note of the how and when your points will expire.  I’ve had cards that the points expired within a year of being acquired.  It really sucks when you see that you accumulated 10,000 points and lost most or all of them
  • Keep an eye out for more ways to accumulate points.  My family and I have enjoyed great hotel rooms, in desirable areas because I had the points to either pay for the room 100% or I like the cash and points option
  • Make sure u know how to redeem your points.
  • Keep an eye out for any changes in the program

 

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