Top 5 Mistakes People Make With Their First Credit Card
Source: https://www.pexels.com/photo/administration-analytics- business-commerce-237675/
The new Credit Card act that came in to force in 2010 was set to provide protection to users. It made it hard for those less than 21 years of age to get a credit card and now many in college or leaving college are getting cards and committing the same naïve mistakes kids in high school did.
Getting your fist credit card marks advancement to new responsibility levels rather than just achievement. To make through it without being laden with a crippling debt and poor credit scores, here are five mistakes by first time cards holders you should avoid.
1. Failing to do a thorough shopping for best rates.
This is a common mistake people getting their first card do. Going for the first offer you get is a desperate move and denies you a chance to shop through different card rates in the market. The interest rate is the biggest factor to consider when getting your credit card and it affects the ease with which you get to pay the debt.
2. Going for rewards instead of looking through all factors in a credit card
Many credit cards will advertise placing their rebates and rewards like travel points at the front. You have to be wise to go beyond this because while all these rewards are great, they only make send and you only maximize them if you can make full monthly payments and at a low rate.
3. Failing to read the fine print
The savvy and smooth talking sales guys and bright adverts will harm sly give you time to get to the fine print. This is your major responsibility when going through credit card selection. Before getting one look at the fine print to determine factors like the total fees of getting and using the card, interest fee, minimum payment, when your first payment is due, interest rates on cash advances, penalties etc. All these factors will give you the real cost of using the credit card and help you know the better deal.
4. Making late payments
Making late payments results in late fees and even higher interest rates. It also leads to a poor credit rating score affecting future terms and amounts of loans you can get.
5. Making minimum payments
This may appear as a survival tactic but it hurts both your credit score and builds up a credit burden in the long term leaving you tied with a huge debt. Pay of your monthly balances in full and to make it easier you are advised to at least keep your balances at below 30% of your credit limit.
This way you build up your credit rating which is determined by how you and pay up your credit.
Patrick Ward is a legal researcher specializing in finance, loans and debt analysis, and bankruptcy law in Carson Firm. He has a decade of experience in analyzing the legalities involved in the dynamics between local and global financial institutions. He is also passionate in helping individuals overcome their financial challenges. Follow on twitter @blgbankruptcy