Tips for new Credit Card Holders

Having your first credit card can give you such a sense of freedom and convenience. The ability to buy something you want and then pay it off later is incredibly seductive. And as much as you say it will only be for emergencies, the temptation to use it to treat yourself “every now and then” can be just too great. Spending more than you are earning is the quickest way to get into debt, so when you are new to the world of credit, then you need to be careful.

The first thing to think about is your interest rate. If you are paying a high interest rate, then you may want to move the balance to a card with a lower rate. Many companies offer an introductory rate of 0 percent for a year, take advantage of this and it will be much easier to make your repayments.

Create a budget each month and allow plenty of money to pay off your credit card. It is essential to pay off your balance in full each month to avoid any negative impact on your credit score. Consider paying a little extra each month so you can clear your balance more quickly, this will give you the chance to be free of debt quicker.

It might seem tempting, but try to avoid taking money out on your credit card, the company can charge a large fee for this and if you do it on a regular basis this can quickly add up. Stick to making purchases on your card.

Be wary of credit limit increases, it can be a real buzz to hear that your credit limit has been raised, but never forget that this is not your money. If you have a bigger balance you will still have the same amount of income to pay it off so don’t go overboard.

Be aware that some places will charge you for using a credit card rather than a bank card, they can charge a fee of £2.50-£5.00 each time you use it and if you use it in these places regularly then this will make a huge difference to your balance.

Always pay your balance on time. Late payments often result in negative marks against your credit score, so be sure you pay up when the credit card company asks you.

Read everything your credit card company sends you. You might dismiss it as junk mail, but it could potentially be important so try to pay attention to it. Keep everything that they send you in writing because it is good to have a record of your correspondence for legal purposes.

Keep all credit card information secure and never let anybody else see it or use your card. Even a good friend may be tempted to take advantage if they think they can get away with it.

If things go wrong, and for some reason you can’t pay your balance, do not ignore it. Speak to your credit card company and they should be happy to help. They want your money and they will accommodate your situation in order to get it. If you lose your job, or simply cannot afford the repayments, then talk to them and create a payment plan with them.