12 Guidelines for New Credit Card Users in USA

The first credit card can be exciting, tempting and intimidating. If you’re going to have your first credit card (or your child is going to have it), here are some ideas to keep in mind.

  1. A credit card is a serious matter. The issuing company lends you money and responsibility is on you to repay all the money.
  2. One card is probably enough. Have just one and avoid temptation.
  3. Keep your credit limit low. Depending on how you are going to use it, $500 or $1,000 will be enough for most first-time credit card users.
  4. Pay the balance you owe in full each month. Avoid service charges and establish a good credit history.
  5. Make your payments on time. This will help you establish a good credit record and avoid late fees.
  6. Use the card for emergencies. Start using this new comfort slowly. Continue to use cash, debit card and checks for most purchases, especially until you feel comfortable with the card.
  7. Never allow others to use your card. You are responsible for all charges on your card. Don’t let others borrow it and don’t reveal your social security number/PIN or any other personal information related to your credit card.
  8. Keep track of your card usage and compare your records to the information on your monthly statement.
  9. Keep the card active. Even if you only use it for emergencies, try to use it for small purchases every three to four months to keep it active. In that case, pay the outstanding balance before interest is earned.
  10. Avoid using the card for cash advances. The interest rate charged on cash advances is often higher than the purchase rate and you are charged interest immediately.
  11. Create a spending plan and budget. Don’t let your credit card payments exceed 20% of your monthly income.
  12. If having a credit card is a problem, cancel it or stop using it for a while.

Here are some other points to keep in mind regarding your credit card:

Credit card companies make money by charging interest on long outstanding balances. Often, the rates they charge are quite high. In addition to the interest, they also make money from annual/joining fee, cash withdrawal and others.

Choose a card that meets your requirement. First-time users should look for one that has low (or no) annual fees and low interest rates. If you are not going to use it much, benefits such as rewards (airline tickets or cash refunds) will not offset the charges that are usually applied with this type of card.

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Having a good credit history is important. People with good record often find it easier to get credit in the future and often get lower rates on their loans.

Carefully analyze the details of the card. Make sure you understand all charges and how interest charges are calculated.

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