How to Use Your First Credit Card

The decision to apply for your first credit card is a big one. On one side, you’re excited about the prospect of using this tool to improve your finances. Conversely, you may have some concerns about making a financial mistake that costs you now and in the future.

There is no right or wrong way to apply for your first credit card, but there are some tips you can follow to ease the stress and put yourself on the right path to success.

With little or no credit history, you may find it difficult to obtain an unsecured credit card. Fortunately, you can use a secured credit card – which requires a cash deposit – to build credit.

Here are some tips for using your first credit card:

• Use it often. Don’t overdo it, but make sure you use your credit card regularly as this is what helps your credit score.
• Pay your balance on time. You know your due date and you should stick to it no matter what. Even if you only pay the minimum amount, doing so is critical to boosting your credit score.
• Don’t max out your credit card. With access to credit, it’s easy to get so excited that you begin to make purchases that you typically wouldn’t. If you don’t watch your credit utilization ratio, it could drag down your score.
• Pay off the entire balance every month. It’s not always easy, but if you keep your balance in check you shouldn’t have any problem paying it off when your statement comes due. This helps your credit score, while also ensuring that you’re never hit with a finance charge.
• Track your spending and make changes accordingly. Maybe you realize that you’re overspending on your credit card. The sooner you see this the sooner you can take action. Or maybe you see that you’re not using your credit card at all. Once again, this allows you to make minor and immediate changes for the better.

There is no right or wrong way to use your first credit card, but these tips can definitely help. If you follow these, you’ll feel better about how you use your card and what you’re getting in return.