If you have no credit history and you want to build one, getting your first credit card right is imperative. First timers especially often fall prey to drowning in debt because they don’t have a good strategy guiding them with their spending. To help you along, here is a quick credit card 101 guide you can take advantage:
Find the right card
One of the first things you need to do to get it right from the start is to know the basics. You need to understand factors such as annual fees, interest rates and perks so you’ll have a better idea how purchasing via credit card works.
When choosing a credit card, for example, one of the main things to focus on is the annual fee. Some cards have no annual fees while others may charge you a hefty one. Interest rate is the next thing to consider. Obviously, you’ll need to look for one with the lowest interest rate. Finally, you need to consider the potential perks that come with using the credit cards.
Develop a strategy
Credit cards can be tricky with their interest rates and hidden charges but you can get around them by developing a strategy. As a first timer, you need to start slow. When you keep spending blindly, you might end up racking up a hefty bill you cannot manage. It’s very important to watch your charges carefully to avoid drowning yourself in debt.
Stick to your budget
The trick with using credit cards wisely especially for first timers is to create a budget and stick with it. It would help if you choose just one or two expense to charge on your credit card. As a rule of thumb, it’s also financially wise to keep you charges below 30% of your credit card limit.
Set-up automatic payments
Delaying on your credit card payments is a big no-no. To avoid delays or missing a payment, it’s best to set-up automatic payments for your credit card balance. When opting for this route, make sure you always have enough balance on your checking account. It would also help if you aim to pay your dues in full. This way, you don’t have to pay for the interest rate saving you a lot of money in the long run.