Getting your first credit card as an adult is a liberating and exciting experience and while you might be ready to hit the shops and go on a spending spree, you should consider first the habits of responsible credit card users.
Your credit habits have a direct impact on your credit score. And if you want to purchase a home, buy a car or obtain other forms of financing in the future, there are six habits that you need to adopt today.
Before you even get started spending or putting your card in your purse or wallet you will need to register it online and make sure it is active so you have a card that you can use. Without registering it you haven’t confirmed your identity and it won’t work.
Have alerts and reminders set up to pay your monthly balance in full, and don’t forget to pay this otherwise you might wind up with a huge credit debt and be in a world of hurt as you try and get yourself out of the credit cycle. Setting up email reminders and alerts in your calendar will help you to remember to pay on time.
Don’t pay the minimum amount, pay your balance in full and you will be able to stay on top of your credit card. This is a very responsible habit for credit card users and will ensure you don’t get charged fees or interest.
While giving credit cards the boot might keep your debt to a minimum, but it does nothing for your credit score. Credit card companies notify the bureaus each month and report your most recent credit card activity. The information reported can either break or make your score. By having an active card that has a zero balance you can keep a good credit rating so when the time comes to get a home loan or a car loan you have a credit history.
You never know when you might need your credit card and keeping your account open is an exercise in self-control and will be helpful if you do need extra support for something that is unexpected or needs to be paid on a credit card. Keep your accounts open and you will be sure to have the emergency funds when you need them.
Figure out the best rate for the credit card you want to apply for and be mindful that a higher rate will mean you will be charged huge amounts of interest. Do your homework and switch to a card that offers low fees and low interest. If you have good credit and pay your bills on time each month, you might be eligible for a rate around 10% – 12% or lower. Contact your creditors and ask for a lower rate. Sometimes, they’ll grant this request on the spot. If not, start shopping for a new creditor.