Your First Credit Card: Staying in Control

Getting your first credit card gives you buying power you didn't have before. You want a new flat screen TV? Your first credit card allows you to get it right now, and worry about paying for it later. Don't have enough cash in your pocket to make that impulse buy? Your first credit card allows you to get anything you want at any time, and all you have to do in exchange is make a relatively small minimum payment each month.

But the feeling of financial freedom your first credit card gives you can be misleading. Those charges add up, especially if you acquire more cards. And, before you know it, you have a big credit card debt, and can barely cover the combined minimum payments on all the credit card bills coming to your house every month. And, if you start missing credit card payments because you simply don't have the money to cover all of them, then you're in serious trouble.

Getting that first credit card can seem like a gift at first, but it can turn into a curse pretty fast. But it doesn't have to. Not if you use your first credit card wisely.

Don't use your first credit card to make impulse purchases.

Once you have your first credit card, it's pretty easy to get what you want whenever you want, depending on your credit limit. But, before you charge it, ask yourself some questions.

• Is it an item that you really need, or are you just getting it because you can? If you didn't have your first credit card, and had to pay for the item all at once and in cash, would you still want to buy it? Often, people make impulse buys with their first credit card because they can, not because it's something they really need or want. And they're still paying for that item long after they've lost interest in it.

• Remember that the item will end up costing you more than the ticket price because you charged it on your credit card. So, if you didn't have your first credit card and had to pay cash, would you still buy the item if it cost more than the ticket price?

Just because the credit limit on your first credit card goes up doesn't mean you have to use it.

For some people, a higher credit limit means being able to get more stuff. But you should never make purchases on your first credit card just because you have more available credit. You should make charges based on whether or not you'll be able to comfortably pay the bill you'll get each month.

Never pay the minimum on your first credit card.

The monthly minimum payment on your credit card bill is a percentage of the balance you owe. And, the lower this percentage, the longer it will take you to pay off the balance, and the more you will end up paying in interest.

It's very tempting to make the minimum monthly payments on your first credit card. But you should try to pay at least 5% of your current balance each month. And you should never let your balance reach a point where you can't comfortably pay that 5%.

If you can, try to pay 10% of the monthly balance on your first credit card. The more you pay each month, the faster you'll pay off the balance, and the less you'll end up paying in interest.

Think of your first credit card as a useful tool. It can help you get the things you really need that you might not be able to get otherwise. But use your first credit card wisely. Otherwise, you won't be in control of it. It will be in control of you.