Friday Jul 01, 2022

Tips to Use Your First Credit Card

You can build good credit habits right from the start.

A credit card is a great way to build your credit history and build a solid financial foundation. However, it can also lead to debt that you must repay for many years. Here are some tips to help you get started with your first card.

Establish a budget

Although credit cards are convenient for making purchases and earning rewards, they shouldn’t be used for things you cannot afford. You can avoid getting into debt by having a realistic estimate of how much you can spend each month and what you will have to pay off.

Use a budget such as the 50/30/20, where you spend 50% of your income on essentials like food and housing, 30% on things you don’t use, and 20% on saving and paying down debt. This will keep your credit card spending in line and within your income.

Keep track of your purchases.

The first step is to determine how much you can spend. The next step is to track your purchases using your credit card’s website or mobile app throughout the month. After you have reached your monthly spending limit, you can stop using your card until the balance is paid off. This discipline will help you build credit and keep you from getting into credit card debt.

Automate your payments

It can be difficult to pay your monthly bill on time. You can avoid late credit card bills by setting up automatic payments before the due date. You should ensure that the scheduled payment is greater than the minimum payment, ideally for your entire balance. Also, make sure you have sufficient funds in your checking account before the payment is scheduled. You may be charged a penalty or a late fee if you miss a payment.

It is important to pay on time because your payment history is what lenders use to determine your credit score. 2

Each month your credit card payment is due on the same day. This makes it simple to remember when you are due.

As little as possible of your credit limit

It’s tempting to max your credit card, i.e. charge more than your credit limit. But it’s important not to do this. Your credit utilization is the second largest contributor to your credit score. This refers to how much credit you use from your credit limit. Your credit score can be affected if you have a high credit card balance and carry it around from month to month. It can also lead to credit card debt, which can be difficult to pay off. 3

It is better to use 30% of your credit limit than you think for your credit score.

Every month, pay your bill in full.

The minimum payment required by your credit card issuer is one per cent of the outstanding balance. This may seem easier and cheaper than paying the full amount owed, but it will cost you more over time.

You will pay interest each month if you don’t pay the minimum amount until you have paid in full. Because accrued interest will be applied to a portion of your monthly payment, your balance will not decrease. Let’s get to the bottom of it. To avoid interest, pay your balance each month in full.

Make sure to check your statement regularly.

Your credit card issuer will send you a monthly statement detailing your transactions for the previous billing cycle. Even if you have already scheduled your monthly payment, it is important to read your billing statement. To spot errors or unauthorized charges, you should carefully review your statement. To be corrected, these errors or unauthorized charges should be reported immediately to your credit card issuer.

Credit cards usually come with a $0 liability guarantee. This means that you will not be held responsible for fraudulent charges. Federal law states that credit cards come with a $0 liability guarantee, which means you won’t be held responsible for fraudulent charges.

You can view your transactions online or download the mobile app for your card. This will allow you to spot any errors and check them in real-time. Alerts can be set up to help you spot suspicious activity as soon as it occurs.

Redeem rewards

Understanding the rewards program if you have a rewards credit card. To maximize your cash back or points, spend in the highest-reward categories, such as gas and restaurants.

Then, don’t let your rewards collect dust. Reward points can be used to redeem for statement credits, checks to your bank account, travel and hotels, gift cards, or other rewards, depending on which credit card you have. You’ll need to use the rewards, or they will expire. For more information about your card’s expiration policy, please refer to the fine print.

Take advantage of the Extra Perks.

Many credit cards offer additional perks, such as cashback or travel rewards. Many credit cards offer perks such as rental car insurance, waived checked baggage fees, travel insurance, price protection which allows you to get a refund if the price of an item drops after you purchase it; extended warranty; and price protection. Log into your online account and review your agreement to learn more about your credit card perks. You can also call customer service to discuss your questions.

Learn How to Avoid Fees

You can avoid most credit card fees by avoiding certain behaviour, except the annual fee. To avoid a late fee, you can pay your bills on time. To avoid paying a cash advance fee, skip the cash advance. You can avoid foreign transaction fees for purchases made abroad with a card that does not charge them.

Get the Mobile App

You can keep track of your credit card account via the mobile app by using your credit card. Logging in anytime allows you to check your balance, view available credit, verify payment posting, etc. While you could do most of these things from your browser on your phone, apps are designed to be faster and easier to use on mobile devices.

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