Getting your first credit card is a significant financial milestone. After sorting through an endless array of program options and promotional offers, you made your choice, filled out the application, and saw those two magic words: You’re approved!
After the initial excitement wears off, it’s important to remember that just like your first car, your first credit card comes with a lot of responsibility. While it may be tempting to grab some friends to take the new plastic for a test drive, it’s a good time to exercise a little restraint. The financial decisions you make now will have long-term effects. It only takes a momentary lapse in judgement, to make a mistake that could follow you for years to come.
Before you start exercising your newfound financial freedom, here are a few tips to make sure your first credit card experience is a positive one:
1. Pay attention to the fine print. Even if you don’t need reading glasses, you may want to have a pair handy. The big credit card companies tend to sneak stuff in the small print. Introductory interest rates can be attractive (like 0% APR for a certain amount of time), but once those offers expire, you could be left paying higher interest on your purchases. Not to mention, if you are carrying a balance when your 0% offer expires – you could be left to pay an extremely high APR on that balance.
2. Don’t be a card counter. If you have multiple cards, it can be tempting to spend more than you intended. Also, it makes your wallet pretty large – which makes for uneven seating or a heavy purse. Simplify your life – stick to a single card, and keep the credit limit sensible.
3. Consistency pays off. This simple step will help you avoid additional interest charges, and it’s an effective way to build an excellent credit rating.
4. Always pay your bill on time. Late payment charges are usually more expensive than your minimum payment, which can make it hard to keep up with your bill. If you’re worried that you’ll forget the due date, most cards offer an automatic payment option. Use it. Or set a recurring reminder for yourself on your phone or a computer calendar.
5. It’s your budget, don’t fudge it. Try to think of your credit card as for emergencies only. Do your best to continue using your checking account or cash to cover everyday expenses. Your credit card is like that friend you call when you need help moving or a ride to the airport. There when you need it, but not to be overused.
6. Steer clear of cash advances. These advances usually charge a higher interest rate than regular credit card purchases. The convenience isn’t worth the cost.
7. Keep your monthly credit card payments to less than 20% of your income. Once your bill exceeds that amount, it becomes exponentially more difficult to stick to a sensible, reasonable budget.
8. Review your credit card statements each month. In addition to being a smart way to track your spending, regular monitoring is the most effective way to combat credit card fraud and identity theft.
9. Be honest with yourself. If you find that your spending gets out of hand, there’s no shame in putting your credit card away (or getting rid of it all together), until you correct your bad financial habits.
Credit cards can be useful tools for emergencies, and when used properly, they can help you maintain a strong credit rating. But with so many card options available today, it is essential to choose the one that’s right for you.
If you haven’t secured your first card yet and are wondering where to find a trustworthy offer, First Financial Federal Credit Union offers a variety of Visa Credit Cards to meet your financial needs. If you live, work, worship, attend school, or volunteer in Monmouth or Ocean Counties in NJ – we’ve got the perfect credit card to fit your lifestyle. Learn more here, and apply online 24/7.
*APR varies up to 18% when you open your account based on your credit worthiness. These APRs are for purchases and will vary with the market based on the Prime Rate. Subject to credit approval. Rates quoted assume excellent borrower credit history. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. No Annual Fees. Other fees that apply: Balance Transfer and Cash Advance Fees of 3% or $10, whichever is greater; Late Payment Fee of $29, $10 Card Replacement Fee, and Returned Payment Fee of $29. A First Financial membership is required to obtain a Visa Credit Card and is available to anyone who lives, works, worships, volunteers, or attends school in Monmouth or Ocean Counties. See firstffcu.com for current rates.