Tips for Your First Credit Card - Brink's Money
Tips for Your First Credit Card
20 Apr 2022
Every year, more and more Americans are being introduced to the world of credit by opening up their first credit card. Having a new credit card can be exciting because it means having access to funds you weren’t originally counting on. On the other hand, a credit card is also a new responsibility you have to attend to. If this is your first time using one, you might be unsure about how to go about managing it effectively. Signing up for a credit card is a step in the right direction towards building a strong financial foundation as long as you use it responsibly. Luckily, we have some tips to get you started:
Set Up Automatic Payments
When you open up a credit card, you get access to various features that will make managing it much more convenient. One of these features is setting up automatic payments. You may have automatic payments set up for other bills like your car or phone bill so you know how reassuring it is to not have to worry about a late payment or remembering to manually pay your bill. When it comes to your credit card, automatic payments can be a big life saver from fees and hurting your credit score.
Pay Your Full Balance Each Month
As a new credit card holder you may have heard nightmare stories of high interest rates and as a result, have wanted to stay far away from opening one. The truth is, paying your credit card bill on time and in full can actually help you from ever having to pay these fees. Paying your full balance each month is also beneficial to you because it means not having to worry about last month’s purchases lingering on to whatever you buy this month. Additionally, having a balance on your account after you’ve paid your bill will be more expensive in the long run because you will be charged interest.
Make Your Payments on Time
If you take anything away from this article, let it be to make your payments on time. If you want to look after your credit score and financial health, maintaining a solid payment history will be your best bet. Regardless of how much credit you are approved for, making your payments before the due date will save you from late fees and hurting your credit score. Making your payments on time does not mean you are required to pay the balance in full but rather paying more than the minimum to help spare you of interest.
Make the Most of Your Rewards Program
One of the best aspects of having a credit card is all the added perks you now have access to through your account. Rewards programs all depend on your credit card and your provider but it’s safe to say that most credit cards offer some kind of bonus. The most common way to get rewards is by using your credit card and accumulating points that you can later use for discounts on travel, food, and even gas. Rewards typically have an expiration date so when you don’t make the most of them, then they become a missed opportunity. Be sure to stay up-to-date with any perks associated with your card because they can lead to big savings.
Use the Mobile App
Nowadays, there is an app for virtually everything and you might not be sure which ones are worth keeping. One thing that is for sure is that using your credit card’s mobile app will give you the insights you need into your financial health. With the mobile app, you can take your account on the go so you never lose touch. Not only can you make the most of features like checking your balance, you can also make payments to your account and check if you have any pending rewards. Through your mobile app, you also have access to your monthly statements to stay on top of your spending and if necessary, identify unauthorized purchases.
Use Up Little of Your Credit
If you are working towards a good credit score, ensuring that you spend well below your credit limit is a good way to start. When it comes to credit cards, most experts would advise you to not spend more than 30% of your available credit. This amount is also known as your credit utilization rate which is essentially the ratio of how much credit you are using compared to the amount that you have available on your credit account. As you effectively manage your credit card, you might find that your provider will upgrade your credit limit as a benefit but it is important to remember this credit utilization rate best practice.
Understand the Fees Associated with Your Card
One of the best ways to look out for yourself when getting your first credit card is to familiarize yourself with any fees you might be charged with by using the card. Credit card fees vary on provider but there are a few common fees you can look out for:
Late fees: charged if you miss your payment due date
Foreign transaction fees: If you use your card abroad, you will incur a fee for transactions
Annual fees: If your provider charges this fee, then your account will be billed once a year
Signing up for your first credit card is a step in the right direction for building credit. This is especially true if you use it responsibly. Making your payments on time and paying more than the minimum each month go a long way but there are a few other actions to ensure that your credit account is being handled properly. Learning the ins and outs of using your first credit card might seem difficult at first, but by staying organized and aware of your spending, you’ll be in good shape to build your credit score.
Interested in a way to stay on top of your money and free budgeting tools? The Brink’s Money Prepaid Mastercard can help give you complete control and insights into your personal finances while providing budgeting tools to track your spending and set limits for yourself.
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