Getting your first credit card is a positive step toward building an excellent credit history, which, in turn, can cement your financial future. However, credit cards also carry certain risks, and it’s not difficult to amass a substantial amount of debt by improperly using your credit card. So, before you start swiping your card, here are some tips to remember.
- Don’t Overspend: While it’s certainly convenient to charge expenses to your credit card, it’s important that you set a budget and not overspend. Try to work out how much you will be able to pay off at the end of the month, and don’t spend over this amount.
- Track Your Purchases: Once you start using your credit card, make sure to track your expenses. You can do this by checking your statement regularly. Once the expenses have met your spending limit, avoid charging any more expenses to your card.
- Automate Your Payments: If you miss repaying your credit card bills at the end of the month, your payment default could negatively affect your credit score. To avoid this, consider automating your payments, so the amount is directly debited from your bank account.
- Don’t Carry A Balance: If you only pay the minimum required amount at the end of the month, you will carry a balance for which you will be charged interest. Given that credit cards have high-interest rates, it’s best you avoid carrying a balance on your card.
- Make Use Of Rewards And Perks: Certain credit cards offer rewards in the form of cashback, points, and miles when you charge expenses to the card. If you have a rewards credit card or if your card offers any other perks, make sure to use them.
- Be Aware Of Fees Charged: Your credit card provider may be charging you fees like the annual fee, late fee, and cash advance fee, among others. It’s important that you are aware of what fees are charged, so you can do what’s necessary to avoid these charges.
While credit cards are usually safe, there is a chance you may be charged for unauthorized transactions. So, ensure you check your credit card statement and dispute any charges you don’t recognize.
