Managing your First Credit Card by Peter Carville
Approval for your first credit card is quite a milestone it's your first step towards generating a credit history. Should you choose to buy a house or gain finance to purchase a car you'll need a reputable credit record a well managed credit card account can help you to get just that.
However there are many pitfalls that you can fall into when presented with your first piece of fantastic plastic. The golden rule which is often more difficult to stick to than you'd think is 'if you can't afford it don't buy it'. You should only expense items to your card if you know that you can afford to pay off the balance when the end of the month comes or at least within an appropriate time frame. This is where a lot of people get into trouble because they use credit cards to live beyond their means.
If you keep that principle front of mind stick to these rules you should have no trouble managing your first credit card:
Reward yourself not the bank
Most credit card companies charge a yearly fee the fee is usually greater if the card is connected to a reward scheme. In the beginning you may be better off avoiding rewards programs altogether; might actually find that you're paying 80 per annum for the rewards program to be left with a "reward" of a magazine subscription worth 15.
Know your limits
Start small with a credit limit of around 500 while you get used to managing a credit facility. Always make your monthly credit card payments on time try not to exceed your credit limit. Late payment over limit fees are completely avoidable they can quickly erode your available credit.
Transactions only
Use your credit to pay for products services only if you withdraw cash from your credit card account you'll be charged exorbitant interest on that withdrawal form minute it's drawn from your account.
Think short term
Credit cards offer a convenient way to pay for bills services small purchases but they are not a cost effective form of funding for long term borrowing. The interest rate on a credit card is higher than for any other type of loan so consider the account to be a short term solution not an opportunity to buy a plasma screen TV or similar big ticket item.
Shop around
Don't go with the first credit card you see every card has different features rates restrictions so look for a card that best suits your needs. If you plan to pay off your balance each month interest rates won't be of much concern but if you don't think you'll pay it in full every month then you'll want a interest free period moneypage. com credit_cards interest_free_credit_card. html of between 44 55 days. If you have 55 days for example this means that if your statement period runs from 1 June to 31 June you have until 25 July to pay the balance before interest is charged. to avoid paying interest on your purchases altogether you must pay the full closing balance by the due date on your statement so this allows you a few extra days to make repayments before interest is charged.
Peter Carville is freelance article writer who writes for Financial Facts financialfacts. org about the current financial news the credit crunch. Managing your First Credit Card
