5 Tips for Managing Your First Credit Card

Getting your very first credit card in the mail is an exhilarating time for most people. It's just one more sign that you are independent and can handle your own finances. Unfortunately, many young adults don't have the experience to manage their first credit card properly. This can result in damage to your credit rating for the next several years. Here are five ways to manage your first credit card wisely:

Don't get in over your head.

Credit card companies love new customers. They know that, statistically, once you accept their offer of a shiny new card, you will likely be a customer for life. You may find yourself applying for a $500 card and ending up with a $1,500 one. Once again, statistics are on the side of the card company. The vast majority of people who get cards with a higher limit than what they applied for keep it. Most of them will end up with interest payments on balances higher than the limit they applied for. Call the company and keep your credit limit at what you feel is manageable.

Manage balances meticulously.

A credit card is like a bank account in reverse. During the month, the balance builds up and, at the end of the month, you pay off that balance. The credit card companies don't want you to pay off the balance. They would prefer that you only pay the minimum required and pay interest on the rest. If you are a smart credit card user, however, you will monitor the total amount charged on your card during the month and be ready to pay it off when the statement comes in.

Reconcile monthly credit card statements.

One of the most common ways that credit cards get abused by thieves is to charge relatively small amounts to the card regularly. This often doesn't get noticed by those card holders who never open their credit card statements at the end of the month and review the transactions. Make sure that you know the origins of each and every transaction on your statement and have credit card receipts to back up each one.

Pay before the due date every month.

If you allow credit card payments to be 30 or more days late, it can affect your credit rating for the next several years of your life. Keep on top of your payments and make sure that they are made at least a few days before the official due date. Keeping your credit card history current is the one of the best ways to manage your financial future.

Decline offers of future credit cards.

Once you have your first credit card, you will begin to feel like a rock star. It will seem as if credit card companies are fighting over your business- and they are. The company that just issued you your first credit card likely sold your contact information to every other credit card company in the country. You will receive many offers. Decline them all and stick with one card. Juggling multiple cards only increases the chances that you will drop the ball on at least one of them.

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