Since making payments and purchases with the best credit card is convenient, your first card can be a first step towards building good credit and a strong financial future or a way to build a huge credit card debt. While financial experts suggest individuals start building credit as soon as possible when they are young, it could be difficult for some beginners. Wise use of a credit card is one of the best ways to build a good credit score and spending habits to achieve your financial goals.
This article contains some best tips for using your first credit card so you can get the most out of your card while earning free rewards as well.
Shop Around for the Best Credit Card
Credit card companies are legally obliged to disclose all the details like interest rates, fees, financial charges, and terms on their official websites. This helps consumers get the basic details and compare different options available. Before applying for your first credit card, you should also compare different credit card offers to shop around for the best card that fits your needs. There are several no-annual fee credit cards available in the market and choosing one could be a great idea to get your first regular credit card. You should also consider other things like interest rate, introductory APR if any, foreign transaction fee, financial rewards, and other perks to make an informed decision.
Set a Budget
A credit card provides you with a convenient way to earn rewards while making day-to-day payments. But it doesn’t really mean using your card for stuff you cannot afford to repay. You must have a realistic idea of the amount you spend on your card and pay it down at the end of the month. Create a credit card budget plan to use your card for things you can easily afford and pay off in full before the due date. This will help you keep credit card spending in line with your monthly income and other financial priorities.
Keep Track of Credit Card Purchases
Calculating the sum you can afford to pay at the end of the month should be an important step when it comes to making payments via credit card. And tracking those payments throughout the month should be another one. You can use a credit card app or monthly statement for this purpose. Avoid using your card when you reach your limit. This useful credit card tip will not only help build good credit but, good spending habits as well.
Set Up Automatic Payments
Setting up automatic payments is one of the best tips for using your first credit card. This is a smart way to protect yourself from late or missed monthly payments. Automatic payments should be more than the minimum you can pay and paying the full amount is highly recommended by experts. You should also ensure that there is enough balance in your account to make the payment without facing issues.
Use as Little of the Available Credit Limit as Possible
As credit card payments are convenient, it can be tempting to use your card for things you really don’t need and charge it up to the available credit limit. But an important thing to consider is that the credit utilization ratio is the main contributor to your credit scores. The lower you will use your credit limit and pay off the balance in full, the better your credit score will be. Experts suggest credit card users use their cards for 30% of the available credit limit. Consuming entire your credit limit and not paying the balance in full can ruin your score and can also build a wall of credit card debt.
Pay Your Balance in Full Each Month
Credit card companies require new users to make the minimum monthly payments. This may sound easier on your pocket but can cost you much over time in terms of carrying balance month to month and paying high interest. paying a minimum portion of the balance each month adds interest to your total balance and can cause building credit card debt. That’s why make sure to use your card for stuff you can afford and pay down your balance in full each month. This will protect you from high interest and credit card debt.
Earn and Redeem Rewards Smartly
Credit card just doesn’t make payments convenient, but it also helps you earn free rewards points and perks that you can redeem for your favorite things to save money while shopping. You can earn more rewards by using your card for categories that earn the most rewards and perks like air tickets, hotel reservations, gas filling, and more. Go through the fine print carefully to understand the way of earning and redeeming rewards so you can use your card smartly to earn more rewards.
Check Your Monthly Statement Regularly
Credit card companies send a statement of transitions to each user every month. Checking your monthly credit card statement is one of the best tips for using your first credit card as it helps you tally the payments and find out unauthorized payments if any. You can also use the mobile app to get your statement or transaction history in real-time. Go through the statement carefully and check for unauthorized payments, charges, or fees and report to the credit card issuer immediately. This will protect you from any unwanted and unauthorized charges to keep the balance as minimum as possible.
Know Credit Card Fees, and How to Avoid
Credit cards come with different financial charges and fees including the annual fee. Reading the fine print is the best way to understand credit card fees and charges so you can avoid them by using your card smartly. For instance, if there is a late payment fee in case you pay the balance after the due date, you can avoid it by making monthly payments in full before the due date. Similarly, check the fine print for possible fees and charges so you can swipe your card wisely to prevent such fees and charges.
For more information and tips to help you choose the best credit card in NZ, visit our website Credit Cards Compare.
