Getting that first credit card in the mail is a financial rite of passage, a sign that you are now a responsible adult with a job and other responsibilities. That may be true, but if you are not careful, that first credit card could be a financial trap, one that creates mountains of debt and causes a number of other problems.
10 Smart Tips
Now that your first credit card has arrived, it is time to set some ground rules. Being a responsible first time credit card user requires a proactive approach, and here are some rules of the road to obey.
- Consider a secured credit card. If you are new to the world of credit cards, a secured card can help you learn the ropes and control your spending. Secured credit cards are tied to the balance maintained in an associated bank account, making overspending impossible.
- Accept a low credit limit. If this is your first credit card, your credit limit may be rather low, but that is actually a good thing. Having a low credit limit can reduce the urge to overspend, and once you get better at using credit you can always request an increase.
- Sign up for online access. Online access is important for first time credit card users, and once you sign up you can track your spending and redeem your accumulated rewards.
- Set a strong password and check your account activity often. Online access is a double-edged sword, one that comes with security challenges, so set a strong password and check your accounts on a regular basis.
- Turn on two-factor authentication. Two-factor authentication provides an extra layer of defense against password theft, so make sure you use it on your new account.
- Track the balance on your credit card and checking account. It is easy to overspend with your first credit card, so keep a close watch on the balance of your card and your checking account. The goal is to make sure you can pay your bill in full every month, so you can avoid finance charges and hits to your credit score.
- Shred your statements. If you prefer paper statements to pure online access, make sure you shred your statements as soon as the bill is paid.
- Maximize your rewards. Credit cards come with some serious perks, including airline miles, free gift cards and cold hard cash. As you learn to use your card responsibly, you can make the most of your accumulated rewards, trading them in for the items of your choice.
- Record your credit card number and keep it in a safe place. If your credit card is ever lost or stolen, you will need this information to shut off access, report suspicious activity and get a replacement card issued.
- Download the credit card app. Many major credit cards now come with their own smartphone apps, making mobile access easier.
Having a credit card in your wallet is convenient, but that simple piece of plastic comes with a lot of responsibility. If you want to keep yourself and your money safe, you need to approach your new credit card with caution. The 10 steps listed above will help you secure your new credit card – and the rest of your financial life.