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First credit card? Avoid these rookie mistakes

Getting your first credit card is a pretty big deal. After years of watching the adults in your life confidently talk about bills and credit scores, it's finally your turn to rise to the challenge. At the same time, it is easy to get swept up in the excitement of swiping away. While a credit card can help you make purchases you cannot afford, leaning on it as a source of affordability can land you more debt than you may be prepared for.

To save yourself unnecessary financial trouble, you may want to take note of the common mistakes first-time credit card holders make:

Avoid sticking to the minimum payments

While the minimum payments allow you to pay off your debt in small, affordable chunks, they also come with interest rates, which can range from 10 to 20 percent of your balance. So, although it feels like you have the convenience of paying off your balance according to your schedule, you may be paying a lot more than you actually owe, especially if you continue using your credit card on top of existing debt.

Be wary of spending more than you can afford

When you swipe a credit card, you are essentially taking on a small loan that you promise to pay back. Because of this, it is worth asking yourself if the purchase is one you would be comfortable making on your debit card, as well as if you anticipate being able to pay off the potential debt. Missing payments not only lowers your credit score, but can also increase your interest rates, leaving you with more debt in the long run.

Be prepared when signing up for rewards

One of the perks of being a credit card holder is having access to many enticing deals. Many people are drawn to the idea of a cashback bonus, and can end up overlooking how much they spend for the sake of a reward. Focusing too much on rewards is another way to spend more than you can afford, leading to more debt and, unsurprisingly, more interest payments.

Protecting your credit score goes a long way

Personal finance can undeniably be a stressful matter. However, with wise habits, you can make the most out of your credit card experience. Even if you are still in school or simply do not have any significant expenses yet, monitoring your spending and repayment habits can help you preserve a healthy credit score. This can help portray you as a trustworthy candidate when it comes to taking out loans, applying for housing, and many other situations you are likely to find yourself in at one point or another.

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The Law Office of Kim Covington is a debt relief agency, and I have helped families, individuals and small businesses, file for bankruptcy relief under the U.S. Bankruptcy Code, for over 19 years.

The Law Office of Kim Covington

The Law Office of Kim Covington
1445 Willamette Street, Suite 9
Eugene, OR 97401

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