How Do You Handle Your First Credit Card?

Whether you are going away to college and opening a credit card for emergencies, or getting your first card for another reason, it will be a new experience. With a credit card comes financial responsibility, and you need to know how to appropriately handle your first card.

Make sure you understand the terms: One of the most important aspects to know is your credit card terms. This includes the interest rate, the fees, the payment schedule and possible rewards. You’ll want to know if your APR is fixed or variable and if you will incur any fees, such as an annual or late payment fee. Understanding your payment schedule and any possible rewards, including cash back or points, are also important.

Never go over your credit limit: When you are approved for a credit card, you’ll be given a spending limit based on your credit score. This could be anywhere from a hundred dollars to thousands. While it may seem like your credit card is free money, keep in mind that every penny you spend will have to be paid at some point. And going over your credit limit will only get you in some serious credit card debt, as you may have to pay for over-limit fees and your APR could rise.

Pay your balance in full: The best way to be a responsible credit card user is to pay your balance in full each month. This means that shouldn’t spend any money that you don’t have. This will help you avoid being charged any interest and can help you build your credit score.

Don’t miss any payments: Missing a credit card payment can be detrimental in many ways. You could be charged with a late payment fee, your APR may rise and your credit score can take a hit. You should always do your best to pay on time, even if you can only afford to make the minimum payment. To help you do so, you could set up email or text reminders or sign up for automatic billing through your online banking portal.

Think before you charge anything: Swiping your credit card at the cashier is fast and convenient, but before you charge your purchase to your plastic, be sure to think whether or not it is a smart decision. Ask yourself if you’ll be able to pay the debt off in a timely matter. If not, it is best to use cash or debit.