Are you new to the world of credit cards? It is important to know that you made the right decision when applying for a credit card. It will not only give you more financial freedom, but it will also boost your credit. If you are trying to find a way to build your credit, there is no better way to do so than with a major credit card. However, there are some important things that you should know about credit cards before you start swiping away. Here are five things every credit card newbie should know.
Not all credit cards are created equal. This is something that you want to consider when choosing the best credit cards. Yes, they may all be rectangular, but each company will have different terms and conditions. Plus, based on your application, you may only be approved for a certain maximum. Then, of course, you want to understand the terms of interest. When it comes down to it, learning about terms and conditions is critical before you sign up for a credit card.
Do not take interest rates lightly. The interest rate terms on your credit card are incredibly important. Before you sign up, you want to know what kind of percentage rate your interest will be. If you don’t, you could be slowly building a giant hole, which will be filled with unbearable debt – a hole that will eventually be too hard to climb out of. The lower your interest rates, the better. Yet, if you can’t get your interest rates any lower, you may want to sign up for a pre-paid card until your credit improves.
Ask your representative about fees. Every credit card company will have fees – next to the interest rate, fees are how credit card companies make their money. There are non-bank compliant fees, late fees and more. The last thing you want is to end up with a company that has a draconian fee structure. No matter what, though, if you have a credit card, you want to be careful to pay your bills on time, so as to avoid whatever fees there may be.
Don’t max out your credit card the first time around. Getting a credit card for the first time is a little bit like riding a bike for the first time – you want to take it down the street before you take it around the block. If you go too fast – too soon – you could wind up crashing. So, be sure to use your credit card responsibly and pay your bills on time before you really start swiping.
You may have a low maximum to start. If you’ve never had a credit card, you aren’t going to get the keys to the sports car right away. At first, you are going to get a low maximum – if you do well with your card and if you remain diligent about paying your bills on time, your maximum will increase. In the end, having a low maximum in the beginning will be a blessing in disguise, because a credit card can be tempting.
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