A credit card can be a powerful financial tool—if used wisely. But for first-time users, it's easy to fall into traps that can lead to debt, penalties, and poor credit scores. If you're planning to get your first credit card, avoid these eight common mistakes that many beginners make.
1. Ignoring the Fine Print
Don’t just get lured by flashy offers. Understand annual fees, interest rates (APR), billing cycles, and late fees before you apply.
2. Spending More Than You Can Repay
It’s tempting to swipe, but only spend what you can afford to repay in full. Overspending leads to debt traps and high interest.
3. Paying Just the Minimum Due
Paying only the minimum due keeps your account active—but interest piles up fast. Always aim to pay the full balance each month.
4. Missing Payments
Even one missed payment can hurt your credit score and attract late fees. Set automatic reminders or enable auto-pay.
5. Applying for Too Many Cards at Once
Multiple applications can reduce your credit score and make you look credit-hungry. Start with one card, build history, and expand later.
6. Maxing Out the Credit Limit
Utilizing your full limit affects your credit utilization ratio—a key factor in your credit score. Stay below 30% of your limit.
7. Ignoring Rewards Expiry or Terms
If your card has cashback or rewards, learn how to redeem them. Points often expire or require a minimum balance to use.
8. Not Checking Statements Regularly
Monitor your monthly statements for errors or fraudulent charges. Regular checks help you track spending and stay in control.
Bonus Tip: Start Building Credit Early
Using your credit card responsibly helps you build a solid credit history, which can benefit you in the future for loans, EMIs, and job screenings.
FAQ:
Q. What is the best type of first credit card?
A. Look for low annual fee cards with simple terms, basic rewards, and good customer service—ideally from your existing bank.
Q. Can a credit card hurt my credit score?
A. Yes, if you miss payments, max out your limit, or apply too frequently. But responsible use improves your score over time.
Q. Should students or young professionals get a credit card?
A. Yes, it’s a smart way to build credit—just make sure you understand the terms and don’t overspend.
published on 25th june
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