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Seven tips for first-time credit card holders
Credit cards can be dangerous in the hands of people inexperienced with their use.
First-time credit card owners may not understand the limitations of their new card; it's easy to act as if a credit card entitles the holder to spend as much as they want, whenever they want.
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For these reasons it's critical that new credit card users learn how to use their cards responsibility. See our video for some basic credit card do's and don'ts, or skip ahead to read out seven tips for first time credit card holders.
1 - Learn the rules
When you first get your card you will receive a credit card disclosure, which will detail the interest rate, fees, and credit limit of your card. Being aware of these rules is vital.
You don't want to be surprised by a charge that you could have easily avoided. Since credit card companies make much of their money from fees, most cards have numerous potential charges.
Credit card companies may also change terms and conditions at any time, so watch for an update in the mail.
2- Keep your card information safe
The world is filled with con artists who will be only too glad to run up a massive bill on your new card. Keep your card close to your person, and in a safe place.
Don't leave a bag or purse containing your card unattended. When shopping online, stick to sites that are reputable and secure.
Similarly, don't give your account information out over email or online chat, nor to anyone who contacts you via an unsolicited phone call.
3 - Control your spending
Credit cards won't cut you off if you spend more than you can afford. This is both their great advantage and, potentially, their worst drawback.
It's all a matter of self-discipline and control: just because you can put off paying your credit card debt until later doesn't mean you should.
Don't let the ease with which you can spend fool you: whatever you purchase will eventually come out of your pocket, so buy only what fits into your budget.
4 - Don't use cash advances except in emergencies
A cash advance is a cash loan from a credit card, commonly made right from an ATM.
But the privilege of receiving this loan does not come cheaply: cash advances incur both high interest rates and a costly transfer fee.
The interest rate on a cash advance is generally even higher than those on regular credit card bills.
Though on rare occasions a cash advance might be necessary, don't ever make them a habit.
5 - Check your statement
Credit card companies provide their cardholders with a monthly statement of all purchased items. Examining your statement will allow you to catch any fraudulent charges.
Identity theft has never been more common, so watching out for signs someone has illicit access to your card is important.
Don't ignore tiny charges: some scam artists focus on small sums so as to avoid detection, or to test the card's usability.
6 - Choose your due date wisely
Some credit card companies will allow you to choose when your credit card bill will be due. If possible, opt for a date a few days after your payday.
Arranging things this way will make it easier to pay off your monthly balance since you'll be getting an influx of cash right before you have to pay up.
7 - Pay off your bill on time
Credit card debt can be ruinous -- many lives have been wrecked by irresponsible credit card use. Make it an ironclad personal rule that you will always pay your credit card bill when it is due.
Ensure you will be able to do so by keeping track of your spending and how much money you have in the bank.
Again, self-discipline and the ability to say 'no' to a tempting purchase are critical.
Remember, as soon as a bill goes unpaid, interest starts to accrue, and late fees may also be incurred -- so don't be tardy.
Credit cards are convenient and will make your financial life easier and simpler. Used with care and discipline, credit cards will not cause damage.
The important thing is to know from the start the potential pitfalls of credit card use.
Some people only learn how to use credit cards wisely after a series of errors. Skip the painful lessons of experience by following the tips in this article on how to use your new card responsibly.