Securing your first credit card is a significant financial milestone. It’s your opportunity to begin building credit, which impacts your ability to qualify for loans down the road. Credit cards come with a lot of responsibility, and you’ll want to follow proven guidelines to build credit intelligently. Below are several do’s and don’ts to follow.

Do:

Start with small, manageable purchases.

Don’t dive right into maxing out your credit limit. Start small. Charge only weekly groceries to your card and pay them off. Use it to pay only your utility bills or another predictable, reoccurring charge you know you can pay off comfortably. Restraining yourself ensures you don’t get in over your head and rack up debt.

Pay more than the minimum amount.

Banks and loan companies appreciate customers who can pay the minimum credit card balance on time. Those that pay more, however, could be rewarded with improved credit. You’re showing that you can responsibly manage your finances and have the means to pay what you’re charging. This is also a tool to help you pay off debt faster.

Don’t:

Apply for another card.

Whether you’re doing a great job with your first credit card or have maxed it out, don’t apply for another. Providers submit a hard inquiry on your credit each time, which will lower your credit score. 

You’re also making your finances more complex. You may have trouble remembering to pay two cards, and there is always the chance that you overspend because of a higher credit limit. Wait at least a year to reduce the impact of a hard inquiry and speak with a financial professional before securing another card.

Overlook the statement.

Many people set up automatic pay services and don’t look at their credit statements. You need to check these every month because there could be errors or expenses that you didn’t charge. These could mean you’re the target of identity theft or that a vendor mistakenly charged your card or forgot to refund a returned item.

These statements also include changes to your account, such as a credit limit increase, reward promotions you qualify for, or information about interest rate increases. Read them and file them away to revisit at tax time.

If you’re interested in learning more about credit cards and loans, contact Alliance Credit Union of Fenton, MO. They offer a variety of convenient financial solutions, including mortgages, auto loans, and checking account services. Visit their website to learn about becoming a member or call (636) 343-7005 to speak with a banker.