All the credit card-related benefits, limitations, features, and other terms and conditions can be a little overwhelming to understand for first-time credit card users. Not understanding how to use credit card wisely can lead you to be intimidated and that will limit you to have a full experience of using credit cards.
For removing the intimidation and keeping you away from ill-usage of a credit card that can probably lead you towards dangerous debt traps, here the are top 7 tips for first-time credit card users to use the card like a pro:
- Spend within your budget: To use credit card wisely is to spend according to what your pocket allows:
- Don't spend more than the money you have in cash or your bank account, it will be difficult for you to pay back.
- Set a monthly budget to strategize your expenditures.
- Don't overspend only to earn more reward points.
- Read the T&C carefully: The first thing you should do before and after getting a credit card is to read the fine prints carefully to know your card completely:
- Read about your card reward & redemption policies.
- Know about the fees, APRs, interest rates, and penalties associated with the card.
- Read about the limitations of the card, etc.
- Clear your bills on time: Among other tips for first-time credit card users, it is highly recommended to keep your bills clear:
- Pay your bills on or before your due date.
- Take advantage of the interest-free days available with you in between the statement date and the payment due date.
- Pay your EMIs associated with your credit card on time.
- Delaying payments can accumulate interest and attract penalties.
- Pay your balance in full: Every Month when the statement is generated, you get to know the total credit card balance of the month that you owe. You get the relaxation of paying a minimum amount rather than the entire amount to avoid late fees.
- Due to the minimum payment concept, it is not compulsory to make the entire payment but it is suggested to do so.
- Don't fall in the minimum payment trap as it might help you avoid the late fee but the interest will continue to accumulate.
- Journey towards a good credit score: A credit score is a numerical representation of a person's creditworthiness. It ranges from 300-900. The higher the score the better will be your future loan and credit experience with financial institutions:
- Use credit card wisely from the start to better your credit score.
- Know the aspects which help in reaching and maintaining a good credit score.
- Start formulating a good credit history.
- Aim for a score higher than 750.
- Never withdraw cash from your credit card: One of the very wise tips for first-time credit card users is to make them understand that withdrawing cash from your credit card can be a very costly affair:
- Instead of withdrawing cash, make payments with your card at the store or online.
- Don't increase your APRs (ATM fees, cash withdrawal fee, etc.) by withdrawing cash from ATM
- Keep your card safe: You can keep your credit card safe by following the given tips:
- Set up a strong PIN and don't share it with anyone.
- Don't share your credit card information with anyone.
- Don't save your credit card details on alien devices.
- Use your credit card only on authorized websites.
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