Getting a credit card provides you with unlimited access to spending. For example, it enables one to make large purchases, which you may not be able to do using your savings. However, you should realize that this freedom means added responsibilities when using the card. For beginners, acquiring a credit card means that chances of misuse are quite high.
Overusing your credit card is one real possibility for teenagers who are getting their first card from their parents. The best way to use a credit card is to understand how they function and use it responsibly. In this article, we’re going to look at credit card tips for beginners.
1. Make Sure You Pay Your Balance in Full Every Month
One of the ways to manage your credit card is to pay off the balance in full every month. That is how you avoid being charged high interest rates. Moreover, making timely payments gets you other benefits that may include cash-backs. Overall, the credit card market offers excellent deals to individuals who make timely payments.
2. Try and Pay More than the Minimum Balance
If you pay just the minimum balance, you will only be extending the duration you’re in debt. In addition, you will increase the interest you’re paying every month. If you repay only a small amount of your credit card debt, you may find yourself paying more than double the amount of the original purchase. That means for the best outcome, you should make sure you pay off as much as you can afford.
3. Only Apply For Credit Card That You Have Chances of Being Approved
It’s important to keep in mind that the best credit card deals are reserved for individuals with good credit scores. Any failed credit card application will affect your credit score. For the best outcome, you should research about credit cards that suit your cash-flows.
Remember there are credit card eligibility checkers, which you can use to find deals that may suit you. The only thing you need to do is enter a few details, and you’ll be provided with a list of credit cards which may suit your needs.
4. Secure Your Card
You should never share your CVV number or PIN number with anyone. When presenting your card to salespersons, you should make sure that there is no skimming. When using your card online, make sure the sites are trusted and authorized. The best way to secure your card when using it online is to use the two-step method which major cards follow. This method needs confirmation in the form of a password that is sent to you once.
5. Avoid Overspending When Using Your Credit Card
Most people tend to overspend when using credit cards. The easy availability of credit is the reason for this overspending. When it comes to your financial planning, you should keep in mind that overspending can lead to disaster. Since you’re not going to be asked to pay upfront, you may find yourself spending more than you can afford.
Beginners using credit cards should make sure they stick to a specific budget at all costs. The best way to go about it is to register your mobile phone number with your credit card company. It will let you know your usage and balance your credit limit. Sticking to a monthly limit ensures you manage your financial situation well.
6. Avoid Overseas Fees
When you’re overseas, the best way to pay for expenditures us by using cash. Some cards will charge you foreign loading fees that range between 2.5% and 3.0%, if you use their cards when abroad. However, some cards don’t charge this fee. That means you should compare various deals before applying for a credit card if you are a regular traveler.
7. To Improve Your Credit Rating, Use Your Credit Card
One thing that can damage your credit score is having too much credit. On the other hand, not having any credit history can also be damaging. Fortunately, the market has credit cards, which are aimed at helping people improve their credit ratings. To enable you to qualify for better deals, you should make sure you pay your balance in full every month.
8. Set up Automatic Payment to Enable You Pay Your Balance Every Month
You may want to pay off your credit card debt every month. However, there are times that you may forget to clear off the debt. Setting up an automatic payment to pay off the debt can ensure you don’t miss to make payments.
9. Try and Keep a Low Utilization Rate
The utilization rate refers to the percentage of available credit you use. It’s a major factor when it comes to your credit score. To avoid being seen as a risk by creditors, you should avoid maxing out the credit card. Moreover, you should keep in mind that you can fall into debt if you keep using your credit card to make purchases.
Credit Card Tips for Beginners
Credit cards are convenient tools that make financial transactions easy. However, there are some pitfalls that come with using these cards. You should try and avoid them at all costs. Beginners using credit cards should use the above tips to avoid fraud and falling into debt when using credit cards.