First credit card tips | blog.firstffcu.com

Have you thought about the age you can typically start building credit? While age 23 may be the minimum age requirement for opening a credit card, the idea of even having a credit card may be nerve wracking for some.

We’re here to tell you everything you need to know so you can build your credit with confidence. Here are some important tips to consider before applying for your first credit card.

Don’t just make minimum payments.

You might think covering the minimum payment each month is enough, but in reality – you’ll end up paying more in interest that way. Credit cards typically have a grace period from when your statement closes to when your bill is due. If you pay off your balance in full ahead of the due date, you won’t be charged any interest (this is the ideal scenario).

Say for example, you have a $5,000 balance on your credit card with a 15% interest rate. If you only pay the minimum payment, it could take you three years to pay the full balance with an extra whopping $1,500 in interest charges. Long story short, always try to pay your balance in full.

Always make your payments on time.

Another way you could end up paying more than anticipated on a credit card, is if you miss a payment or are past due. Even if you’re only a day late, your credit card company could charge you a late fee – which can also add up if you’re frequently late. We recommend setting up automatic payments to avoid any future late fees.

Only charge what you can afford.

If the goal is to pay off your credit card balance in full each month (which it should be!), it’s important to only charge what you can afford. Don’t get trapped in “I’ll pay it off later,” because that’s how many people get stuck with credit card debt that becomes out of control.

Instead of thinking of your credit card as “free money,” treat it like a debit card. Meaning, don’t put it on your credit card if you don’t have enough money in the bank for the purchase. This may seem obvious, but it’s also very tempting to just swipe away when you get your card.

Shop around for a credit card.

Not all credit cards are created equal. Some cards are meant for new users, while others are made for more seasoned credit cardholders. It’s always best to first shop around for a credit card that meets your needs and spending habits – before committing to one just because of the alluring benefits.

For example, a store credit card may save you $20 on your next purchase, but it also may typically have a higher interest rate. Plus, those exciting discounts are usually only available in that specific store – which is smart for the business, but likely not ideal for you.

At First Financial, we offer 4 consumer credit card options that each have benefits like a 10-day grace period and no annual fees.+ Our Visa First Step Card is a great card for building credit as a first time cardholder as well.*

Always review your credit card statements.

Every month you’ll receive a bill for your credit card with a list of purchases. You should always review your statement. Why? You can catch any fraudulent charges sooner and have a better grasp of your spending habits. Many card companies offer a detailed report of your spending categories which comes in handy when budgeting and cutting costs where you can. You can even save on paper by receiving your statements online instead of through the mail.

Are you about to begin your credit card journey and don’t know where to start? You can rest assured knowing our financial experts are happy to give you advice based on your situation. Contact us to get started, or stop by your local branch to speak with a representative today!

*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.

+No late fee will be charged if payment is received within 10 days from the payment due date.

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.