Advice to First Time Adult Credit Card Users - Credit Card Industry Roundup #7

Jason Steele
March 1, 2018
Jason Steele CardCon

For Issue #7 of the CreditCardReviews.com Credit Card Industry Roundup, the focus is on adults who are new to credit cards. Jason Steele asks our group of credit card experts this week:

What advice would you give adults who are just starting to use credit cards?

This week we have Chris Motola, Eric Rosenberg, Linsey Knerl, Sean Bryant, Matt Schulz, and Ben Luthi contributing:

Chris Motola - Journalist and business credit card writer at Merchant Maverick

I think there's a lot of bad conventional wisdom around credit cards that just refuses to die for some reason, but if I could impress just one thing on someone just starting out it would be this: there's no advantage to strategically carrying a balance on your credit card. If you have the means, pay your full balance off every month.

It's counterintuitive, but the best way to deal with your credit card is to treat it like a charge card. If you pay off your balance every month, you won't owe any interest. Contrary to conventional wisdom, there's no benefit to your credit rating for carrying a small balance month-to-month. In fact, paying off your balance you'll keep your debt-to-credit ratio low, which can actually help your credit.

It may feel like you're not taking advantage of the ability to slowly pay off a big purchase--and there may still be times where you need to do just that--but interest accumulates every day you don't pay. Why pay more for good and services than you have to? By paying your statement off monthly, you'll be able to take advantage of any rewards programs your card offers without ever really going into debt.

Eric Rosenberg - Finance, travel, and technology writer in Ventura, California.

If you are brand new with credit cards, learn from the lessons of those who came before you to avoid the worst pitfalls while keeping focused on the major benefits. Do everything you can to avoid paying expensive credit card interest. Instead, use your credit card like your debit card or cash before, never spending more than you can afford to pay off in a month. If you do end up paying interest, it will likely wipe out the benefit of any miles, points, or cash back you earn along the way.

Once you have your cards setup for monthly payments in full, you should use your card for every possible purchase. No purchase is too small! Some credit cards offer extensive protections compared to cash and debit cards for purchases ranging from travel purchases to physical items. You might get free trip insurance or an extended warranty, for example, but that only works when you make the entire purchase with the credit card.

If you are at all nervous, remember that you can start slowly. There is no rule that says you have to put any specific purchase on your credit card, and you can add your new credit card to the mix to help you avoid overspending and going into debt. But as long as you don't spend too much and keep your financial accounts in focus, you have little to worry about.

Linsey Knerl - Freelance finance, tech, and health writer from Nebraska.

Credit cards can be an amazing tool, provided you understand their uses and terms. Since no two card accounts are alike, I always recommend taking some time to get to know everything about the card before you make that first purchase. What's the interest rate? Are there introductory promo terms you can take advantage of? How long do these last? What perks or protections does your card come with?

After you fully understand the ins and outs of your card, you can then devise a use plan that will help you meet your money goals without adding burden to your financial health. Decide if you will use the card regularly, with plans to pay it back each month, or if it will be an emergency-only card. (Emergencies should be clearly defined as well.) Establish how you will use any cash-back or points awarded with card use.

Remember that many of a card's terms may be hidden in the fine print. Don't be afraid to hop on the phone with a customer rep from the card company and ask the hard questions. Some card details will be listed prominently on future billing statements, but others -- such as whether your card will protect you against an unexpectedly canceled vacation flight -- won't be obvious unless you refer to the original welcome packet and contract. It can be easiest to simply ask the rep what the guidelines are for getting exactly what you want.

Sean Bryant - Personal finance and credit card journalist. Founder of One Smart Dollar

Credit cards have a tendency to get a bad rap. Yes, they can lead to debt when used the wrong way. However, when used properly, the benefits you receive can be incredibly valuable. If you’re new to credit cards there are a couple of things I always suggest.

First, you need to find a card that fits your lifestyle. Dive into the marketing material for a handful of cards and see what each has to offer. Are they offering a generous sign up bonus? What kind of rewards do they give on purchases? This is where a card can easily make or miss the cut. If a credit card is offering bonus rewards on restaurant purchases, but eating out isn’t in your budget, then it might not be the best card for you. Instead look for a card that will give a bonus when used at grocery stores.

The second thing I always recommend people do is check out the guide of benefits for the credit card you use. Most cards will come with a handful of benefits you might not even know you have. These perks can range from roadside assistance with an American Express card to a free ShopRunner membership with a World Elite Mastercard.

Matt Schulz - Senior Industry Analyst at CreditCards.com. He is also a regular contributor to USNews.com’s My Money blog and the founder of Talking in Class

  1. Job No. 1 for anyone with a credit card is to pay your balance off ASAP. Ideally, you'd do it in full every single month, but if you can't, you absolutely must pay more than the minimum. Otherwise, that's when things can get out of control.

  2. Autopay is your friend. There's nothing more important to your credit than paying your bills on time every single time, and that's easier than ever now, thanks to autopay. Get it set up and you should never have to worry about a late payment or late fee. Just be sure that you always pay more than the minimum.

  3. When picking a card, the oldest advice is the best: Know thyself. Ask yourself how you will use the card and what you want to get from it. Those answers will help guide you to a card that best fits your lifestyle.

  4. Adjust your expectations. Your first card probably won't come with a 50,000-point signup bonus, a low APR and a crazy-high credit limit. That's OK. It allows you to focus on the basics with that first card: paying your bills on time and keeping your balance low. Do those things regularly and that first card will merely be a quick stepping stone to bigger and better cards.

Ben Luthi - Credit card expert and personal finance writer. Staff writer at Student Loan Hero and freelance writes in his spare time.

For starters, don't worry about getting the best credit card out there right now. If you're just getting your first credit card, you're likely also getting started with building your credit history. Getting a basic credit card that can help you do that is the top priority right now. Then, once you've established a good enough credit history, you can start shopping around for credit cards that can give you more rewards and other benefits.

Now is also a good time to start learning good credit card habits. For example:

-Set up autopay on your account so that you don't forget your monthly payments and set it to pay off the balance in full so you can avoid interest.

-Create a budget and keep track of your spending so you know where your money is going. This can help you avoid overspending and getting into credit card debt.

-Avoid racking up a high balance on your card. Your credit utilization, which is your balance divided by your credit limit, should stay below 30% to avoid it hurting your credit score.

Also, it's important to keep an eye on your credit score so that you can see how your actions affect it. Your credit card issuer may offer you free access to your FICO credit score. If it doesn't, use a free credit monitoring service like Discover Credit Scorecard, which offers a FICO score, or Credit Karma, which offers a VantageScore, so that you'll know when it's time to trade up.



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