6 Tips for Your First Credit Card
Getting a credit card can be a thrilling experience. However, before you begin swiping that card it’s important to understand how credit cards work, the types of credit cards available to you and how to avoid getting into credit card debt. Listed below are six tips for how to make the most of your credit card. Please visit one of our Oklahoma branches to discuss the current card offerings and allow us to assist in finding the right one for you!
1. Understand the Different Types of Credit Cards
Let’s start with credit card basics. When it comes to selecting a credit card, it’s important to understand the different types available, each with their own set of potential pros and cons.
If you are someone who loves to travel, consider a travel rewards credit card. These credit cards often offer you bonus points or miles for every dollar spent, sometimes offering up to 4x unlimited points when spending for certain expenditures. These points can later be redeemed for travel, cash back, and more. Another type of card that may interest you is cash rewards credit card, which earns you cash rewards when using the card to make purchases. Own your own business? It may make sense for you to open a business credit card, which helps you earn points when charging business expenses.
2. Use Your Credit Card to Build Credit
If this is your first credit card, chances are that means you are starting with no or little credit. To begin building credit immediately, it is important to start making payments as soon as you can after making purchases. It is ideal to pay your card off each month. Some customers make a daily payment, weekly payment or a payment at the end of each month. If you currently have little or no established credit, a secured credit card may be your best choice. Secured credit cards (sometimes known as credit cards for bad credit), are backed by a cash deposit so that the credit card company has collateral in the event a consumer does not make payments.
When it comes to building your credit history, it is recommended that you consume no more than 30% of your available credit line. To learn what your current credit looks like, visit Annual Credit Report.com. It’s always a good idea to check your score over time, to ensure it’s at a favorable level. You’ll also need good credit to get the best rates when buying a home or a car.
3. Take Advantage of Credit Card Rewards
Once you have selected your ideal rewards credit card, it’s important to become familiar with the rules of how to redeem rewards. For instance, in order to redeem points or cashback, you often need to spend a specific amount of money during an allotted period of time. As a first-time credit card user, it can become difficult to manage the logistics of how to earn rewards, so it’s important to do research with your particular rewards card to understand all the stipulations.
4. Avoid Credit Card Fees
Despite how commonplace having a credit card is, there is a lot of responsibility associated with having one. Make sure to do your research and understand any fees that come along with it. For instance, many cards come attached with foreign transaction fees when you pay for something overseas with your credit card. If you want to avoid paying this fee, you can either make sure to pay in cash or use a card that does not have this fee. Note that many travel rewards cards do not charge a fee if using your card overseas. Some credit cards also have an annual fee associated with their card, so it is important that you read the terms and conditions to understand if your card has an annual fee.
Another common credit card fee to be aware of is the over-limit fees. When you have a credit card, you don’t have free reign to spend as you please, instead your card has a specific spending limit. If you exceed that spending limit, you will get charged an over-the-limit fee. Make sure to familiarize yourself with these fees ahead of time so that you avoid late payment fees and a negative impact on your credit score. It’s also smart to set a reminder on your phone or make a note on your calendar for each upcoming bill date. This way, you will never miss a payment. You can also take advantage of online bill pay to automate your credit card payment. Just be sure to review your bill regularly to ensure all charges are correct.
5. Prevent Debt Accumulation
Credit cards can unfortunately be an easy way to accumulate personal debt. To prevent this from happening to you, make sure to always pay your credit card balance in full each month. It’s also wise to have a plan for how you will pay off your purchases before you make them. That way, you don’t charge anything more significant than you can afford and you won’t get into debt later on.
Another tip to ensure you don’t pay for more than you can afford is to use cash or a peer-to-peer payment system instead of a credit card. If you find it’s becoming more challenging to pay back your monthly payments, it may be time to visit your local BancFirst branch to talk with a banker about budgeting and good money management practices.
6. Choose Your Credit Card Wisely
Selecting a credit card is a very personal decision. Your credit card should reflect your needs so that you can get the most out of it. For instance, although credit cards provide great convenience to your life, if not handled responsibly, a credit card can lead to severe problems.
Now that you are familiar with BancFirst’s first credit card tips, you can apply for your credit card with confidence. Contact us today or visit one of our Oklahoma locations to talk with a banker.