Applying for your first credit card? Maybe you’ve had a credit card or two in the past, and didn’t use it responsibly, and it took forever to pay off, so you’ve held off using credit cards for a while?
Whether it’s your first credit card or you’ve already got several, your attitude and spending habits determine whether you’re a responsible credit card user or whether you’ll get carried away and run up a bill that you’ll have a hard time paying off.
One of the most important things to consider with credit cards is what you’ll use the card for – ideally, using the card for emergencies or major purchases only is best, but there are instances where using your credit card is advantageous to using cash, even when you have the cash. An example would be that you have a credit card that offers extra warranty protection, above and beyond the manufacturer’s warranty. In this case, using your credit card to make a purchase makes sense. (And there are many cards that do offer this extra warranty, so pay attention to the terms and conditions on your credit card!)
Secondly, track your purchases on the card. Calculate in advance how long it will take you to pay off a major purchase, and what the interest will be, before you actually make the purchase. Just knowing what you’ll ultimately pay for something is a strong deterrent to impulse buying.
Third, if at all possible, pay the card off every month. When you do this, you avoid interest charges, and it keeps your debt level low (and more manageable).
And, finally, make sure that you review the terms and conditions for both credit cards you are interested in applying for as well as your current credit cards, to make sure you’re getting the best interest rate, the lowest annual fee (or none at all), and what rewards you are entitled to. If your card is not competitive, then consider switching to a different credit card that offers more.