Do’s & Don’ts: What to Look Out for as a First Time Credit Card User

March 31, 2020

Let’s face it, credit cards receive a bad rap due to fees, fears of drowning in debt, and unmanageable interest rates. Luckily, these can be avoidable perils when you’re well informed.  Smart decisions will help in the prevention of common credit card problems.

Regardless of what stage of life you’re in, we’ve assembled a list of things to keep a lookout for when pursuing your very first credit card.

The Cost of a Credit Card

To generate revenue and give you access to their credit card benefits, fees are typically applied to each credit card. As a first-time user, it’s a good idea to seek out a card without annual fees as you ease into the transition of using credit.

Let’s look at the most credit card fees:

  • APR

The annual percentage rate (APR) is an interest rate that is essentially the cost of borrowing the credit card company’s money. APRs will vary based on the company but they all work relatively the same way. Typically, the interest charge is based on the balance left on the credit card each month. A good way to avoid added interest is by paying off your balance in full before your monthly period is over.

  • Annual fee

Annual fees are an amount that credit card companies will charge for simply keeping the card open. Annual fees vary based on the benefits the card provides. Typically a card with more benefits will have higher fees.

  • Late fees

Late fees are applied when credit users do not pay their bills within the expected period. A grace period is the time users have to pay their bill from the issue date to the due date. Late fees range from $28 to $39 depending on the company.

  • Foreign transaction fee

If you plan to travel outside your country of origin, be wary of foreign transaction fees. Foreign transaction fees apply towards purchases made internationally. The fees from each credit card company vary but usually hover at 3%.

Credit Card Best Practices

With a credit card comes great responsibility. Here is a list of credit card best practices to keep your financial status healthy as you embark on obtaining your first card:

  • Consider paying your credit card off every month — To avoid interest, late fees, and penalty fees, it maybe be a good idea to pay off your balance in full each month. Paying the minimum or a portion instead will lead to unnecessary added debt.
  •  Use only as much credit as you have cash — To avoid accruing debt, try not to charge your credit card more than the amount of cash you have available in the bank. By spending more money than you have, the risks of your debt becoming unmanageable increases.
  • Find a strategy that helps you build credit — A major benefit of using a credit card is building your credit to increase your credit score. As your credit score grows, you become a stronger candidate for high loans like cars, homes, and more. Try to keep this in mind and use your credit card strategically.
  •  Be mindful of credit card fraudAvoid credit card fraud by keeping track of your card, your purchases, and activity at all times. Be wary of any party that asks for you to share your information or credit details.

Your finances work best when they work for you. Take your personal financial situation and standing into consideration as you set out to elect a credit card provider.


Looking for more financial tips, tricks, tidbits, and facts?

Head over to our blog! And if you’re looking for more info on credit, check out our latest post detailing 3 Credit Myths You Need to Know!

Illinois Lending is your partner in finding a better way to borrow. Contact us for solutions to your personal finance needs! Apply online, today!

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