Best Tips on Your First Credit Card - It is a fascinating experience getting your first credit card. To most young adults, it is the best experience ever! After turning 18 and finally getting your driver's license. But then, credit cards are not just all about the fun, seriously, it comes with quite several responsibilities too.
Here is a summary of what really happens when you receive your first credit card: the card arrives at your mail, you activate and purchase with it, get a statement for your credit card afterwards and clear your bills. Quite easy! But then, there are a few more details attached to each of the steps, and good knowledge about them could help you avoid a majority of credit card debts, credit card fees, and credit damage which a very large number of young adults experience upon getting their first credit card. So, here are the details you should know:
Not long after you have been approved to get your first credit card, a credit card that carries your name on it will be sent by your credit card issuer to the address that was filled in your credit card application.
It is necessary to activate your new credit card before you start making use of it. The card comes with a sticker on its front with the number that you should call for the activation of your card. You will need to input your credit card number and your zip code or social security number or both for the activation process. It is impossible to use your credit card before it has been activated.
Alongside your credit card in the envelope it arrived in, you will receive a credit card agreement which is a lengthy document that explains the terms and conditions that works for your credit card. The document further explains the features of your account, how to respond to cases of disputes with your credit card, when and how you will be charged for the card, what penalties you will get for misuse, etc. Even though the credit agreement might come off as a long and unnecessary document, it is best to carefully read it, as it will give you enough information about your credit card.
One of the important things you should know about your credit card is that a credit limit (the highest amount of charge you are allowed to make with the card) has been assigned to it. You can not be allowed to make charges beyond your credit limit unless you have applied for over-the-limit charges to be processed for you. Otherwise, your credit card any transaction you make with your credit card that will put you over the limit will be declined. Even in cases where you have opted in for over-the-limit charges, your credit card issuer can only allow you to charge a specific amount above your credit limit.
The fact that you can charge as much as your credit limit allows though shouldn’t make you get to that level always, as that is not a very responsible way to make use of your credit card. Plus, it might also tell negatively on your credit card. One of its negative effects is that your credit card issuer might revoke some of your credit limits if you finish your balance in a speedy time. Of course, they have given you the credit limit, but they consider it risky when you make too much use of it. You probably will be charged a fee, or your interest rate will be increased in cases where you go above your credit limit. Too much use of your credit limit also tells negatively on your credit score – a number that is used to assess whether you have bad credit or a good one.
So, it will be the wisest thing for you to do if you only charge a small amount, maybe a 10 to 30% of your credit limit.
When you use your credit card for a purchase, the credit card terminal will examine confirm from your credit card issuer that your credit card is valid and that your available credit balance is enough to make the purchase. Once approval has been given for your transaction, a receipt will be printed for you. Sign the receipt and proceed to carry the things you have purchased home.
Some few weeks after the arrival of your credit card, a bill will be sent to your mail, detailing the charges you have made thus far with your credit card and providing a list of the minimum amount that is due and the day when the Payment is due too. You will have to make a payment for at least the minimum payment before or on the due date; otherwise, you will be charged a late payment penalty fee. In a case where you have missed up to two payments in a role, there will be an increase in your interest rate to the penalty rate. In cases where you do not make payments for your balance at all, your issuer will charge your credit card off and send it to a collection agency.
You should ensure that you send in your payment in a much advanced time, such that your credit card issuer will be able to receive it before the date is due. If in any case your payment is received sometime after the due date, your credit card issuer might be able to charge you up to $35 as a fee for late payment, even if you had mailed the Payment before the date when it is due. A majority of credit card issuers will allow you to make payments using your phone or via online payments. Take note that you could incur a fee for an expedited payment made on the day when your payment is due for the avoidance of a late fee.
Irrespective of the fact that you are allowed to make minimum payment though, it is best advised that you should always pay your debts in full every month end, so that you can avoid cases where you have to pay unnecessary interests on the account. This will also help you to avoid the accumulation of debts on your credit account, seeing that clear every one of your debts once it is month end.
Your credit history is one very crucial aspect of your financial life that affects your credit card and activities. Often, credit card issuers check through your credit card history before accepting to issue a credit card to you and also before taking some critical actions that concern your credit account.
If you have a bad credit record, most credit card issuers will try to avoid transactions with you and not just that, you might also find it challenging to get a bank or other financial institutions that are ready to have any association with you. On the other hand, a good credit history projects you as a financially responsible person, and with it, you will not have many problems convincing financial institutions to do business with you. Thus, you should strive at all times to make sure that you maintain a good credit history.
Often, many young adults find themselves in hideous credit situations, mostly arising from the misuse and mismanagement of their first credit account. This is not a good place to be in. However, if you are already in such a situation, credit repair is a very nice option to help you get out of it.
Credit repair entails a couple of financial activities you need to involve in to get your credit score back to a good condition during ugly financial situations. These activities can involve, dedicating more of your money to savings, reducing or totally stopping taking of credits, paying off all accumulated debts on your credit card, etc.
Credit repair is quite beneficial to your credit account and maintaining a good credit history for yourself in a couple of ways. One of such benefits is that it helps you to secure better insurance for your credit; quite recently, insurance firms and companies are beginning to pick an interest on the credit history of clients before granting insurance to these people. Definitely, repairing your credit and getting it back to a good state will put you in a better position to get insurance, considering this fact. Another benefit of credit repair is that it helps to make you look responsible and trustworthy in the sight of potential investors in your business, among other benefits.
The logic isn’t really a complicated one; credit repair helps to get your credit score back to a good state, and in turn, a good credit score opens more opportunities to you.
Surely, getting your first credit card is something worth celebrating. However, you should always remember to take off your credit card and account to the best of your ability if you must enjoy the ride. The information that has been provided in this article will be of great help to you.