First Time Credit Card User? Here are some things to know

Money is money, no matter how you spend it, but in an ever growing online culture paying with cash or bank transfer is becoming impractical if not impossible. Credit cards are the most popular, and maybe safest, cashless payment system around; nevertheless there are a lot of things you have to pay attention to before applying for your first card.

  • It is important to choose your cards wisely and carefully. All cards are not the same. So those who travel more could get cards that have points that can be redeemed for air miles. Those who have credit card debts should opt for cards with low interest rates. Those who use their cards in a large number of places could use cash back cards. So choose wisely and do not get the first card you come across.
  • As a first time credit card user it is quite possible to go overboard in spending with the option of buying now and paying later. However, it is only advisable to charge what you can afford because eventually you will have to pay for everything and if you don’t, then you will also have to pay interest. Hence, although it might seem very tempting, try not to whip out your card with every new thing you see on the rack.
  • First time credit card users can find it difficult to keep a track of their payments and then end up in a credit card trap. Hence, the best idea is to make sure to pay the bill in full and on time and this will keep your interest nil. There are some cards that have penalty APR and the card interest can go up to 25% to 30% with just a single missed payment. Hence, try to avoid this feature while you are out card shopping.
  • Before you apply for credit card, try to understand how dangerous credit card debt can be. It could lead you to a debt trap if you are not careful and it could be hard to get out of it. Some just keep on making the minimum monthly payments but eventually they catch up and all the previous loans add up to a lump sum that is too large for the pocket. Hence, have strict financial discipline you can adhere to and then opt for a card. Keep an eye out for the credit card statement and keep checking it from time to time.
  • It is important to do some good research while card shopping and avoid the cards which have a fee for every time you take your card out of the wallet! Go through online reviews of cards and check whether there are credit card companies that surprise customers with hidden charges from time to time! Avoid these card companies because they often lure in customers with deals and offers but you eventually end up paying a lot more in the long run.
  • While applying for a credit card, check your credit card eligibility to avoid rejection which in turn can lead to adverse credit scores.