October 6, 2022

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Complete Guide for New Credit Card Users

If you’re just starting out with credit cards, it can be a bit overwhelming to pick the right one. There’s a lot to consider: Do you want cash back or travel and points? Should you get an annual fee or no-fee card? How much should your credit limit be? And what about all those other terms and conditions—is this the right card for me? Don’t worry! 

Here you will get covered with credit card tips new users need to know before they start building their credit history. What are we talking about when we say “credit score”? How do rewards work? Read on:

Look for perks and rewards

If you’re looking for rewards, then look no further than your credit card. The best rewards programs offer points or cash back on purchases, but even if they don’t, they can still be useful in helping you build your credit history. Some cards also offer “travel” benefits such as airline miles and hotel points when you use them to pay for travel-related expenses.

A good travel credit card will have an annual fee that’s less than $100 per year. If a travel card has an annual fee higher than $100 per year, it’ll probably be worth considering a non-travel rewards card instead.

Pay attention to your credit score

Your credit score is numerical that represents your creditworthiness. It affects the interest rate you pay on loans and the amount of money you can borrow. Your credit score is based on your credit history, which includes information from your credit card, mortgage and other accounts.

Don’t max out your card

You should never max out your credit card or use it to the extent that you’ve only got a few dollars in the bank. Using your card to its max will lower your credit score and could even result in a penalty fee from the card company. If you find yourself close to maxing out your card, there are several options available:

  • Pay off part of the balance every month. This way, you’ll be reducing how much money you owe each month while still maintaining an active account on which to build a credit history.
  • Ask for an increase in limits on other cards. This will give you more room for spending without getting into debt on any one particular card too much.

Pay on time

When it comes to credit card fees, the most common one is late fees. These are assessed when you pay your bill after the due date, and they’re typically around $35. If you don’t pay on time enough times—or if you make a habit of missing payments altogether—your credit scores will drop, which could mean higher interest rates in the future or a lower limit on your credit cards.

According to SoFi experts, “The average credit card interest rate for existing accounts is a whopping 14.4%, and interest charges add up very quickly.”

Know the fees

The first thing you need to know when considering a new credit card is that fees can be hidden and high. In fact, some cards come with an annual fee of $450 or more!

The second next thing you need to understand is that there are ways around these fees — namely, by shopping around for credit cards with low or no annual fees.

Now you’re ready to go out and get the credit card that’s right for your family. You’ve learned all about how to manage a new credit card, so there’s nothing left to do but grab one today!