Getting your first credit card is exciting. Not only are credit cards convenient, but they can also put you on the fast-track to improving your credit score, assuming you use them wisely and avoid common credit building myths. This begs the question of, “How do I handle my first credit card responsibly?” Public Service Credit Union has a few tips to help you avoid common credit card pitfalls, budget your money, and improve your credit score. Read on to learn more!
First Credit Card Pointers
- Don’t Overdo it with Applications: Getting one credit card with a low spending limit is a good way to become familiar with using one safely. Applying for multiple credit cards at once can hurt your credit score, defeating the purpose of you applying for a card in the first place.
- Know the Card Terms: Understand the terms that come with the card, including the interest rate, associated fees, and due dates.
- Understand the Impact of Interest: Interest will make even small purchases more expensive. If you pay off your card every month, it shouldn’t accrue interest, but if you don’t, expenses can start to snowball.
- Stick to a Budget: Don’t charge more than you’ll reasonably be able to pay. When you let balances on your credit card roll over into the next billing period, they’ll snowball with interest rates, making them more difficult to pay off.
- Make Payments on Time: Whether you’re paying on a credit card or loan, making payments on time is critical and can help improve your credit score. If you don’t make timely payments, it’ll show on your credit history and negatively impact your creditworthiness.
- Make Payments in Full: Depending on your balance, credit card bills are often around $20 to $40 a month. Budget for this amount. If, for whatever reason, you can’t make your payment, pay as much as you can.
- Mix it Up: Don’t rely on your credit card alone. Keep cash and your debit card in your wallet as well, so you’re not tempted to your credit card.
- Keep Your Card Close: When you go out, take your credit card only if you know you’ll need it. Also, don’t share your credit card information over the phone unless you’re speaking to someone you trust. These tips can help prevent credit card fraud.
Get More Financial Tips from Public Service Credit Union!
If you’re gearing up for your first credit card, why not consider online banking with a credit union near Detroit? You can manage your expenses easily while enjoying all the benefits of being a credit union customer. Contact us at Public Service Credit Union to learn more about how credit unions work and to find credit union in Michigan.