When you use a credit card for the first time, the key is to spend within your means and pay the bill on time and in full every month in order to build credit history and avoid expensive interest charges. If used responsibly, a credit card can be a powerful tool that saves you money in rewards and interest down the road. If you’re reckless with it, however, you may wind up facing credit score damage and debt that could take years to get under control.
Given that how you manage your first credit card will dictate your future credit card and loan options, as well as help determine how good your credit score is, it’s important to use your card as a good first step in your credit-building journey. Fortunately, that doesn’t have to be too complicated.
How to Use a Credit Card for the First Time:
Use the credit card on a regular basis. Making a manageable amount of purchases from time to time will give you the opportunity to develop a habit of paying your bill in-full and on-time. Plus, account activity is one of the factors card issuers will look at when you ask for a credit limit increase. If you use your card regularly and responsibly, you’re more likely to get a credit line increase when you request one.
Always pay the monthly bills on time. When you use a credit card for the first time, starting out with timely payments is critical to avoiding interest charges and building a good credit score. A payment that is a day late is still a late payment, so try to pay several days before the due date. Setting up automatic monthly payments from a checking account can be very helpful.
Pay off the entire balance every month. Paying in full every month is a good habit to get into, leading to long-term credit score gains and allowing you to avoid being charged interest on your purchases. Plus, a credit card that you use for the first time will likely have a low credit limit, and a balance reduces your available credit.
Set a budget and maintain low credit utilization. Know how much you can afford spending each month and try to stay within that budget. You’ll also want to keep your balance-to-credit limit ratio below 30% on the first credit card you use, and all future credit cards. If you have to make an unexpected purchase that will take a chunk out of your credit limit, pay it off as soon as you can – even before the bill comes due.
Using your first credit card responsibly can be a tall order for some people. But once you’ve mastered it, consider the hard part out of the way.
On the other hand, if you’re nervous about the actual mechanics of using your new credit card for the first time at a store or online, try not to be. There will be lots of prompts throughout the process that will tell you exactly how to use your credit card.
Finally, as you continue to use your first credit card and build your credit history, be sure to monitor your account for any suspicious activity by checking your monthly statements for unauthorized transactions. It’s also important to never give out your credit card information or PIN over the phone, unless you are calling the issuer’s customer service department directly. And, to keep your sensitive information extra-safe, memorize your passwords and PINs, or write them down and keep them in a secure location.
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