What’s going on Dinks? Do you remember your first credit card? I remember mine vividly. I opened it up at Bank of America 10 years ago. I’ve seen the limit start out at $1000 then balloon to $4000. Unfortunately, I’ve maxed that card out a few times. There’s so much I wish I would have known about credit cards when I first opened that one. I’m glad I finally got my act together. That credit card will be paid off by the end of this month. If I knew back then what I know now about credit cards, it would have been paid off years ago. Today, I want to go over some tips that you can use if you are a first-time credit card user.
Don’t max out the card
I know most people review their credit card limit when they first get it. While you may have no intention of spending near the limit, it can happen. It’s not good to keep a high balance on your credit card. I learned that the hard way. At one point my credit card was maxed out. My credit score wasn’t good at all at this time. It took a few years, but I got my act together and started paying the balance down.
Know your payment date
The next tip is to know your payment due date. You should pay your credit card bill on time. Late payments can have several adverse effects. The first effect is that late payments will lower your credit score. Payment history accounts for at least 35% of you credit score. Paying late can make it drop pretty quickly. Late payments may also result in an interest rate increase. I’m not sure how much the rate will go up, but be prepared for an increase. You will also be charged a late fee for your late payment. The fee can range from $20 – $35. Who wants to pay even more money to their credit card company?
Pay it off monthly
Another good tip is to pay off your credit card balance each month. If you do that, you will save money on interest each month. Doing that will eliminate the chance of you getting into credit card debt. I wish I would have been smart enough to pay my credit card off each month back then. If you have the opportunity to pay it off each month, do it. Your future self will thank you for being smart.
Don’t go swipe crazy
Don’t go crazy swiping your credit. With this being your first credit card, you may want to buy a lot of stuff. Don’t do it. You will eventually have to pay credit card balance off. Many people go on a spending spree when they get that first credit card. Don’t make that common mistake. If you can’t afford to go on a spending spree without the credit card, don’t do it with it either. You will be setting yourself up for failure.
Watch out for your limit being raised
The final tip is to watch out for your limit being raised. I can remember my limit going from $1000 to $2000, then to $4000. Instead of being wise and asking the bank to lower it, I kept the higher limit. I figured that I wouldn’t spend up to that amount. Who was I kidding? I maxed that card out a few months later. As I stated earlier, I’m glad that I finally got the spending under control.