Credit Card Tips For First Time Card-Holders
Managing your credit card can be a little confusing, especially if you're a first-time card holder. You may not know all the rules at first, and sometimes that may get you into some financial situations due to bad judgment. Here are 4 rules that you should always follow to ensure that you have a trouble-free experience while using your new credit card.
๐ญ.) ๐ก๐ฒ๐๐ฒ๐ฟ ๐ฐ๐ต๐ฎ๐ฟ๐ด๐ฒ ๐บ๐ผ๐ฟ๐ฒ ๐๐ต๐ฎ๐ป ๐๐ต๐ฎ๐ ๐๐ผ๐ ๐ฐ๐ฎ๐ป ๐ฎ๐ณ๐ณ๐ผ๐ฟ๐ฑ ๐๐ผ ๐ฝ๐ฎ๐ ๐ผ๐ณ๐ณ ๐ถ๐ป ๐ณ๐๐น๐น
Credit cards are flexible in that they don't require you to pay your bill in full every month. Rather, you can make your minimum monthly payment, which is a portion of your total bill, and pay the remainder off over time. But any time you carry a credit card balance forward, you automatically end up paying interest on it -- interest that makes your purchases cost extra.
A better bet is to keep your balance low enough that you can pay it off in full by the time your bill comes due. Doing so will also help keep your credit score in good shape, as too high a credit card balance can drag your score down.
๐ฎ.) ๐๐ผ๐ป'๐ ๐ฎ๐ฝ๐ฝ๐น๐ ๐ณ๐ผ๐ฟ ๐๐ผ๐ผ ๐บ๐ฎ๐ป๐ ๐ฐ๐ฎ๐ฟ๐ฑ๐ ๐ฎ๐ ๐ผ๐ป๐ฐ๐ฒ
There's nothing wrong with having more than one credit card. But one thing you shouldn't do is apply for too many at the same time. For one thing, doing so could lower your credit score and serve as a red flag the next time you try to borrow money. But also, when you open multiple cards at once, your spending power increases, and that level of temptation could be dangerous.
๐ฏ.) ๐๐ผ๐ป'๐ ๐๐ฝ๐ฒ๐ป๐ฑ ๐บ๐ผ๐ฟ๐ฒ ๐๐ผ ๐ด๐ฒ๐ ๐ฟ๐ฒ๐๐ฎ๐ฟ๐ฑ๐ฒ๐ฑ
Sign-up bonuses are a great way to score extra money or reward points. But one thing you shouldn't do is spend extra just to snag them.
Say you normally spend about $800 a month on your credit cards and you decide to sign up for a new card that'll give you $500 cash back for spending $3,000 within your first three months. If you have to force yourself to spend $600 extra during that time to snag your bonus, you won't be up $500 -- you'll be down $100.
๐ฐ.) ๐ ๐ฎ๐ธ๐ฒ ๐๐๐ฟ๐ฒ ๐๐ผ๐๐ฟ ๐ฟ๐ฒ๐๐ฎ๐ฟ๐ฑ๐ ๐ฝ๐ฟ๐ผ๐ด๐ฟ๐ฎ๐บ ๐บ๐ฎ๐๐ฐ๐ต๐ฒ๐ ๐๐ผ๐๐ฟ ๐น๐ถ๐ณ๐ฒ๐๐๐๐น๐ฒ
Some credit cards offer generous rewards on gas fill-ups. Others give extra cash back for restaurant purchases. Those perks are great and all, but only if you spend a significant amount of money on those expenses. If you don't, they're pretty useless.
Before you sign up for a credit card, make sure the rewards program it offers is something you can actually take advantage of. If you hardly dine out but spend a lot of money at the grocery store, you can look for a grocery credit card that offers generous cash back on supermarket purchases.
Credit cards are a very useful tool -- as long as you manage yours the right way. Stick to this set of rules so that you can make the most of your cards and avoid some of the mistakes so many consumers fall victim to.
