5 Things to Know Before Getting Your First Credit Card
Getting your first credit card is not only exciting but a significant milestone. We are sure you are also excited about getting your first credit card. As you get it, you must know all the ins and outs of a credit card. It will save your money and allow you to build a good credit score quicker.
As you are a new seeker of credit cards, you must know the basics of it. Like how it works, how responsible use of credit cards can help you, and much more. Not many people know that even the slightest lack of responsibility can affect your credit score.
If your credit card holds a bad credit score, you will be withheld from enjoying many of the advantages of having a credit card. When such a case arises, seek top-rated credit repair companies who can drag you out of the situation. These companies fix your credit score by removing inaccurate and negative information from your credit reports.
However, it is vital to use your credit card with some precautions to build a good credit score. Let’s dig into the article to know more about credit cards and their precautions.
1. Understand the Key Terms While Researching for a Credit Card
Before applying for your first credit card, you must understand some key terms. We have jotted down some key terms with their meanings below:
- Fee per Annum
To keep your account operable, credit card issuers charge fees every year. If you are new to the game of credit cards and want to keep the cost low, apply for a credit card with no fees per annum.
- Annual Percentage (%) Rate or APR
According to the CFPB, the interest rate of the credit card is the fee for borrowing money. The credit card interest charges are shown every year as Annual Percentage Rate or APR. To avoid these interest rates all you need to do is to pay all your statements every month.
- Credit Limit
The credit limit is the spending limit of your credit card. The lenders set this limit to minimize the risk of lending money. However, you can extend your credit limit by paying an extra amount or earning credits.
- Minimum Payments
To keep your account updated and avoid penalties and fees, you must pay a portion of the billing cycle total each month. This amount is known as the minimum payment amount of credit cards.
By understanding the key terms mentioned above, you can easily select the most suitable credit card for you.
2. Avoid Overspending on Your Credit Cards
Avoid including things on the credit card that you can’t afford. The first mistake most people make after getting a credit card is buying something expensive or unnecessary. Trust us; it would have a bad impact on your credit score.
Take wise decisions when using your credit card. Poor planning and failing to pay credit card bills can demolish your credibility and credit scores.
3. Make Full Payment of Your Credit Card Bills Every Month
Settling 100% of the credit card bill every month is the best approach to keeping your good credit score. Plan to make the payments on time. In case you can’t afford to make full payments at the moment, stop using your credit card until you settle the outstanding amount.
As a reward for paying on time, your credit card interest rates will stay as minimum as possible.
4. Late Payments Need Credit Repair
Are you someone who forgets about due dates? The late assignments or even the late electricity bills won’t harm you more than late credit card bill payments. So make sure you don’t miss the due date of your credit card bills. Missing bill payments can come with the below consequences:
- Late Submission Charges: If you miss the due date of your credit card, you will be charged late submission fees. This fee is adjusted every year. However, if it is your first time, they would charge up to $20. But if you subsequently violate the rules, the fine can be doubled.
- Penalty Annual Percentage Rates: Most companies do not impose penalty APRs on late payments. However, some companies still believe in charging the penalty APRs. Including this penalty in your APR can increase your interest rate to 30%.
- Damages To Credit Score: Besides late fees and penalty APRs, late submission by at least 30 days can damage your credit score. Credit score repair affiliates can reduce the impact of a bad credit score.
Late submissions of bills can make you go through worse conditions. But here is the good news for you! Credit repair companies can guide you out of such situations. But still, do not make the same mistake every time.
5. Prepare Yourself to Deal With a Credit Card Fraud
Are you afraid of applying for a credit card due to fraud? Credit cards provide you with more protection than debit cards. All your need is to prepare yourself to handle the situation.
Let’s suppose your debit card information got leaked. The fraudster can empty your account within a second. You can recover that amount with the help of your bank, but it takes time. And in that period, you might need cash.
However, when it comes to credit cards, you don’t need to worry as:
- The Credit Card Money Is Not Yours. You don’t need to worry as the money at stake belongs to the credit card company, not you. So just relax and don’t panic. You will have time to prepare and convince your credit card company to remove any fraudster charges on your bill.
- You Don’t Need to Pay Anything. The federal law minimizes the responsibilities of unauthorized credit card purchases. However, if you have Visa or Master cards, the liability will be reduced to 0%.
- Easy Collection of Replacement Card. Once you inform your issuer about your credit card fraud, they will instantly block your previous card. After blocking the card, they will send you the new one with a new number as soon as possible. In this way, no one will be able to make transactions through your previous card.
Understanding the basics before applying for a credit card can help you in many situations. Taking precautions and wisely using your credit card can build your credit as soon as possible.
However, using it with a lack of responsibility can hurt your credit score. But in some cases, credit repair professionals can help you out by removing inaccurate and negative information from your reports.