How To Manage Your First Credit Card - 9 Tips for You!
How can I manage my first credit card? In this blog, we have shared some important tips for you. Have a Look!
Is it your first credit card? Don’t know how to manage it to your advantage? Then, my friend, you have landed on the right page. Getting a credit card is a big step towards becoming financially responsible but knowing how to use it is completely different. We have listed down a few tips on how to manage the first credit card. Understanding how important it is to use a credit card correctly can accrue you more benefits. Read on to know more about the tips:
- Choose the right as per your profile: The first and foremost important thing is choosing the right credit card as per your needs and spending habits. For this, you need to analyze your requirements, how much you spend, your financial health, and a lot more other things which can help you know which credit card can fulfil all those needs. After that, you can compare credit cards to narrow them down to one credit card.
- Read the most important terms and conditions carefully: Before applying for a credit card you need to read the most important terms and conditions of the selected credit cards to know which card is pocket-friendly to you. You will learn all about the hidden charges associated with a credit card in the most important terms and conditions booklet. Being aware of the charges can help you make the right decisions while using your credit card.
- Go for a lifetime free card as your first credit card: As a first-time applicant, you can go for lifetime free credit cards. As on these credit cards you do not require to pay joining and renewal fees. It’s not that being a lifetime credit card won’t offer you many rewards, there are credit cards that are highly rewarding like the Flipkart Axis Bank credit card, Amazon Pay ICICI Bank credit card, etc. Starting off your credit journey with a lifetime free credit card can be a great idea as you will be able to build a credit score with it and you will understand how a credit card works.
- Pay credit card bills in full and on time: While using a credit card this is the most important thing that a credit cardholder must keep in mind is paying the credit card dues on time. It is quite possible to forget the due date of your credit card bill payment which can affect your credit history negatively. So, to avoid this from happening you can register for the auto-debit services through which your credit card dues will be deducted automatically on the selected date. This will have a good impact on your credit score.
- Maintain a low credit utilization ratio: You get a predefined credit limit on your credit card up to which you can utilize the funds. The credit limit is determined on the basis of your income level. Keeping a high credit utilization ratio can have a poor impact on your credit score so it is advisable to maintain the credit utilization ratio between 30% - 40%. If you overspend a lot then you can set a threshold limit on your credit card so that on reaching that limit you get notified about it. This way you will easily maintain a healthy credit utilization ratio.
- Keep track of your credit card statement: Another important tip while using your credit card, you must keep a track of your credit card statement so that you stay aware of your transactions on your credit card. Any error omission or the fraudulent transaction can have a negative impact on your credit history. Keeping a track of your card statement keeps you informed about these mistakes so that you can immediately report them to the credit card issuer.
- Don’t use a credit card to withdraw money: Using a credit card to withdraw money from ATMs can be a worse decision to make. Withdrawing money from the ATM with a credit card attracts cash advance charges. These charges vary from card issuer to card issuer.
- Never share your credit card details with anyone: First-time credit cardholders must keep in mind that they do not share their credit card details with anyone, be it family or friends. The credit card details are confidential information and sharing it can lead to credit card fraud. Do not even store your credit card details on your phone.
- Do not jump on card upgrades or limit increases: As soon as you get a credit card to apply for a card upgrade or a limit increase can be a blundering mistake to make. Use your credit card at least for a year wisely and keep your credit card dues clear and low credit utilization ratio and the credit card issuer will offer the limit enhancement. After a year you can also apply for card upgrades.
To conclude, following the above-mentioned 9 tips can help manage your first credit card. Using a credit card wisely is the only way to maximise its benefits. You need to always keep the credit utilization ratio between 30% - 40% and your credit card outstandings clear. As a first-time credit card applicant, you must go for entry-level credit cards first to get a hang of it and to understand how a credit card works as there are quite possibilities that you may end up using your credit card beyond the limit.
Additional Reading - Best Entry Level Credit Cards In India