5 Tips for New Credit Card Customers

Credit cards have great benefits, and so many use cases that really make a credit card worth having. First of all, credit cards are a great way for someone with little to no credit history to start building their credit history and improving their credit score. You will need a solid credit score and history when it comes time to secure a loan for a big purchase such as a car or home, in addition to many other things like opening a new cell phone contract, or getting approved to rent an apartment. Credit cards also offer great rewards like free flights, hotel stays, cash back, and more. There is no doubt a credit card is worth having if you know how to use it effectively. As with any upside, however, there are potential downsides as well. Failure to use your credit card appropriately can ensure that you are saddled with debt and a poor credit score. With this in mind, here are five tips for new credit cardholders to keep in mind when beginning to use their first credit cards.

1.    Shop around before applying for a credit card

 There are literally thousands of credit card deals out there. Many of them aren’t very good, but some of them are great. There are plenty of websites that allow you to compare credit cards to find the best one for you. Do as much research as you can before applying for a credit card and you will be glad you did. Look into all of your options such as infinite banking, before making a decision to get a credit card. Perhaps cash value life Insurance is a better option if you need access to more credit.

2.    Pay your credit card bill on time each month

 The simplest way to stay in the good graces of the credit bureaus, and to increase your credit score, is to make sure you pay your credit card bill on time each month. While this seems obvious, many people miss payments even when they have the ability to make the payment. Almost all credit card companies have an online interface where you can set up automatic payments from your bank account to ensure that you never miss a payment. Paying late can also get you stuck with late fees.

3.    Pay your balance in full each month

 Another easy way to use your credit card effectively to increase your credit score is to pay your credit card balance in full every month. It should go without saying that if you can’t afford to pay your balance in full each month, you should cut down on your spending, and look into a credit card that offers a long introductory APR period on purchases and balance transfers, and then a low standard interest rate as well. If you’re carrying a large balance, you will rack up some serious debt and be at risk of hurting your credit score. At the very least make sure you make the minimum payment each month.

4.    Understand what you are getting into with your credit card

 It’s easy to go around applying for credit cards willy nilly, and you will probably get approved for some. However, this isn’t the best strategy. Instead, do some thorough research on the available credit card options, and once you apply, make sure you understand the terms of the card. This means reading the fine print to make sure that you won’t be stuck with a huge annual fee, or large interest rates that you aren’t aware of.

5.    Don’t exceed your credit limit

 You should set a budget so that you do not spend more than your allotted credit limit each month. Going over your credit limit can hurt your credit score, and more than likely will end up getting you hit with penalty fees. I recommend downloading your credit card company’s smartphone app so that you can keep an eye on your spending.