Yahoo Finance 6 Things You Must Do When You Get Your First Credit Card
Getting your first credit card can provide opportunities to make more convenient purchases, build credit, finance large expenses and even earn rewards. However, you’ll also need to prepare to make on-time monthly payments, minimize fees and resist overspending so you don’t end up in financial trouble.
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This makes understanding your card and using it responsibly important. Here are six things you must do when you get your first credit card.
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Get Your Card and Online Account Ready
Before using your physical card, you’ll need to follow the activation instructions included in the welcome letter. This often includes either calling a toll-free number or using the creditor’s app or website. Depending on the method, you might confirm information from the card or even tap it on your phone. You should sign the back of the card, too.
After activating the card, set up your online account if you don’t yet have one. This will be important for making payments, tracking transactions and accessing some of your card’s features. Once logged in, you can consider options such as activating any rewards, signing up for digital statements and enabling account alerts.
Get Acquainted With Your Card’s Terms
You shouldn’t skip checking the documents that came with your card. While it can seem like a lot of reading, you’ll better understand important terms that affect your finances. Here are some key details to look for in your card agreement and other materials:
Requirements for promotional rates and bonus offers
Standard interest rates for purchases, balance transfers and cash advances
Penalty interest rates
Your grace period
Annual card fees
Other fees, including those for cash advances, late payments, balance transfers and foreign transactions
Your credit limit
Minimum payment calculations
Your payment due date
Rules for rewards programs
You’ll also find much of this information on your online account or future statements.
Ensure Timely Monthly Payments
To avoid fees, credit score damage and potential financial insecurity, you’ll need a strategy for tackling your new monthly card payments. This includes either setting up reminders or automatic payments through your online account. Make sure your creditor receives your minimum payment by the due date, but aim to pay a higher amount when you can.
If possible, don’t carry a balance at all and instead pay it off within the card’s grace period, which usually lasts around three weeks. That way, you don’t waste money on interest or have the debt following you from month to month. Your credit score should also benefit when you’re not carrying high balances.
Limit and Monitor Your Spending
Compared to when you use cash, you’re at a higher risk of overspending with a credit card. Not only could your credit line encourage impulse purchases, but potential rewards may also tempt you to spend more. So before using the card, examine your budget so you know your spending limit and the types of expenses you should prioritize.
As you use your card, carefully think about your purchases and avoid large ones without considering the long-term financial effects. Keep in mind that even small purchases can add up to high levels of debt. You might consider using spending tracker apps that connect with your new card account or enabling transaction alerts through your creditor’s app.
Check Your Card Account Frequently
Plan to keep a close eye on your online account and monthly statements. You should look for potentially fraudulent transactions or incorrect amounts to report. Check for account updates, including credit line and interest rate changes and promotion expirations. Plus, watch your account balance — ideally, it shouldn’t be over 30% of your limit — and any fees or interest.
Your online account may have additional features worth using. For example, you might be able to track your credit score, use financial calculators, redeem reward points or activate offers for points or money back for certain purchases.
Protect Your New Credit Card
Unfortunately, your physical card could get into the wrong hands if you drop it somewhere or it gets stolen. Your card details can also be at risk due to skimming devices, data breaches, scams and deceptive apps and websites.
To reduce your chances of identity theft and fraudulent charges, follow these tips as a new card holder:
Don’t use your new card for any transactions that aren’t through a reputable company.
Avoid online transactions if you’re using an insecure network or device.
Be aware of popular online and in-person payment scams.
Don’t leave your card details visible to others.
Consider leaving the physical card at home when you don’t plan to use it.
Take advantage of fraud alerts.
Contact your bank ASAP for lost cards or suspicious transactions.
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This article originally appeared on GOBankingRates.com: 6 Things You Must Do When You Get Your First Credit Card
