After you obtain your first credit card, you should know that this is a big adjustment and a big step in your life, at least in the financial element. Naturally, since they are used by a high percentage of people throughout the world, and that many people you know already have it, you probably know all the basic things. Things like, how they work, what are they used for, how to handle the responsibility, and of course, how to build your credit score. Pretty often, financial experts describe credit cards as financial products that have some highly complex elements, and that they have the potential to cost you a lot of money if you are not careful.
With that said, we feel like everyone should know a few important things before obtaining them. Of course, you need to be completely aware of all of the cards you can have in your wallet, and what they can and cannot do. Having a proper understanding of all the crucial elements will help you with a good credit score. Moreover, this can mean that you can save yourself some money in the process. If you are interested in learning about all the necessary things about controlling personal finances, be sure to check out Crediful. In order to help you with understanding what’s important about credit cards, we gather seven important things you need to know. Let us present you with what we’ve gathered.
The Best Ones are not for Newbies
If you just obtained your first credit card and you can say that you are a newbie to the world of credit cards, you are not qualified enough to have the best ones available. The explanation is pretty simple, the most valuable cards are the ones who have rich rewards and perks. In order for someone to acquire one of these, he needs to have an exceptional credit score. At the same time, the most valuable cards are available only to users who have a long credit history, which is complement with some of the income requirements needed. Those who just got their card for the first time need to know that the credit card will be equipped only with features that are usual for people who don’t have a credit history. That doesn’t mean that this is bad news since they have just enough features to offer.
Fee and Rate Transparency
Issuers are obligated to present all of the terms about the financial deal like rates and fees to you before you apply for their services. This is required of them by federal law. All of this essential information can be found in the Schumer box. This is a table that consists of all of this information and can be found on the application page. The Schumer box includes these elements:
- The annual fee
- Annual percentage rates or APR
- Foreign transaction fees
- Late fees
It is of the utmost importance to learn about all of these, and more if there are any before you submit your application. That way you will not be surprised when the issuer deducts some money from your account. More importantly, you will know what all of these deductions mean.
You can Avoid Paying Interest
It is not important how high the APR is on your credit card, you don’t need to pay any interest that is asked of you in a case where all of your obligations are paid every month and paid in full. This is because of a financial element called the grace period. After you pay all the money that is asked of you for one month, the interest will not start accumulating until the next due date. The conclusion is, you need to pay every one of your obligations every month and you will never have to face paying an interest fee. In case this happens, you can write them an email and explain the situation.
First Credit Card’s Massive Influence on the Future
Were you aware that your first credit card can have a massive influence on your financial future? Well, it can have a massive influence. Based on your actions, it could either help you have a proper score, or it can completely diminish it. This is the reason you need to be careful and pay attention to several things. Naturally, what’s going to happen is entirely based on what you will do. At the same time, you need to be aware that all your monthly reports will be created by your issuer. After then, your issuer will then send it to the credit bureaus, companies that obtain and categorize all of the reports and form your credit score out of them. These reports consist of all the necessary details about your financial activity. You need to be careful not to cross your limit and that you pay all that you owe at the end of the month. Only by doing that you are going to build a good reputation, in the financial aspect of course.
Don’t Get Too Close to Limit
When you receive a credit card of your own, you will be presented with the limit that you must not reach at the end of every month. We are talking about the credit utilization ratio. This is a percentage of the money you are using every money through your card. You must know that this is one of the most important factors for the future of your credit card score. Spending the amount of money that is dangerously close to the monthly limit is not a good thing to do. We are going to give you one example if you have the limit of $3,000 and you spend $2,500 that month. So, you need to keep your monthly balance as lower as possible. Believe us, the lower it is, the better situation is for you. In the end, we would like to provide you with one little hint, spending 30% lesser amount than your limit is the best way to go.
Taking care of your own finances is not an easy task. This is the reason many people are hiring professional help to take care of their money instead of them. If you are new to the world of credit cards, we are certain that our article will provide you with every necessary information that you should be aware of before you obtain a credit card.