Financial Resource

First time credit card users – Know how to stay out of debt

When you are opting to take a credit card for the first time you should be very careful and gather all possible knowledge about the conditions that your Credit Card Company is providing you and how to use your credit card in a sound manner. It is good to have a credit card as it helps you to build credit and create a credit history. This is the basis of your financial activities in future as all banks and lender would check your credit scores while giving you a loan of any kind, whether it is mortgage, business loan, auto loan and so on. However, if you don’t use your credit card judiciously you would end up in credit card debts. You would then have to opt for consolidating your debt. In order to prevent yourself from falling into debt, you can follow the tips given below.

1. Read your credit card arrangement thoroughly – Most of the times you overlook to read your credit card’s terms and conditions in full. It is essential for you to read the fine print of your credit card’s policy before you sign up for it. This is because how much your credit card will actually cost you is disclosed here. The features that you see in the ads are only the best features to allure you.

2. Stick to your credit limit – Sticking to your credit limit does not only mean that you have to just not exceed your credit. It is advised that you should not use more than 30% of your available credit limit if you want an impeccable credit history. This would not only protect you from incurring more debt, it will also help you to have a good credit history.

3. Pay off your credit card balances completely each month – If you pay back your balances in full every month you will be exempted from paying interest. Even though there is a prevalent belief that a running credit card balance makes the credit card company increase your credit limit, but in reality you can get regular credit line increase even by staying within your credit limit.

4. Check the credit card statements regularly – As a credit card holder it is your responsibility to check the account statements regularly. If you find any unauthorized charges or errors, then you should contact your credit card issuer immediately.

Thus, as a first time credit card user, you should follow the above points for a debt free use of your credit card.

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