Learn 11 Things to Know Before Getting Your First Credit Card

Your first credit card might help or hurt your credit.

One of the primary motivations for getting your first credit card is to improve your credit score. However, it can have the reverse effect if you’re not careful. Everything is dependent on what you do.

 

Your issuer will report your credit card activity to credit bureaus every month – the firms that create the credit reports that serve as the foundation for your credit ratings. The information presented includes whether your payments were made on schedule and how much of your available credit you utilised. Late payments are undesirable. Maxing out the card is a bad idea.

Before applying, you can view the rates and costs.

Federal law requires credit card companies to publicly disclose certain terms, such as interest rates and fees, before you apply. These are listed in a Schumer box, which is a table that can normally be found on a credit card’s application page online (search for a link labeled “Rates and fees,” “Pricing and terms,” or something similar) or on a slip enclosed with paper applications. For example, the Schumer box has the following cards:

Annual fee, or what it charges cards every year.

APR stands for annual percentage rate. This is the interest rate you’ll be charged on accounts carried over from month to month. Some cards impose various interest rates on different sorts of balances, such as purchases, balance transfers (debts transferred from other accounts to the card), and cash advances (cash withdrawn with the card, usually at an ATM). In addition, some cards, albeit not many, have penalty APRs that apply after a late payment.

 

Foreign transaction fees, or costs imposed when making transactions outside the United States, are normally 3% of the total amount charged.

Late fees are imposed if you pay even one day late or if you do not pay the minimum amount due.

Credit card fees can be avoided.

Even if you’re new to credit, you can avoid credit card fees entirely:

There are numerous fantastic starting cards with no annual fees, including many secured cards.

If you pay on time, there are no late fees.

Foreign transaction costs are irrelevant if you do not intend to use the card to make purchases outside of the United States – and numerous issuers do not impose foreign transaction fees in any case.

The fees linked with these operations are meaningless if you never conduct balance transfers or cash advances.