MoneySmart Tips for First-Time Credit Cardholders (2020)

MoneySmart Tips for First-Time Credit Cardholders (2020)

Are you a first-time credit cardholder? It’s such a thrill to finally own this little plastic and buy the things you’ve always wanted. However, there are limitations to a credit card and responsibilities as a credit cardholder.

Before you activate your card and start swiping, it’s important to know that with each swipe, you owe money to your credit card issuer.

But don’t worry. We have listed down some reminders to help you avoid falling into the credit card debt trap.

Understand the terms and conditions

When you apply for a credit card, it’s more exciting to know about its perks and rewards. It’s fun to know what you can get in return with every credit card spend.

A credit card’s terms and conditions are often a lengthy read, so lots of people skip this part. However, you need to fully understand the rules and guidelines of your credit card issuer if you don’t want to be in for an unpleasant surprise.

You think your card’s interest rate is 2.75%, but you may be shocked to find out that it only applies to certain purchases, like supermarket purchases.

Every reward and benefit comes with a certain limitation, so read the terms and conditions and don’t be intimidated by financial jargons.

Some of the important things you need to know include the cardholder agreement, interest rates, late fees, foreign transaction fees, cash advance fees, as well as the terms and conditions on bills payments and the rewards program.

Know the features of your credit card

Learn how best to utilize your credit card so you can maximize your savings and earn bonus or reward points quicker. Some credit cards let you earn cashback, miles, or bonus points that you can redeem special gifts or items.

Make sure your card is secure all the time

Keep it in a secure place in your bag, office, or home. When you use it, put it back in the same place so you’ll notice right away if anything’s amiss.

And because your card contains sensitive information, never share a photo of it online. Don’t disclose your credit card information to anyone either.

When shopping online, make sure that the apps or e-commerce sites you’re visiting are secure.

When you’re dining in restaurants, fueling up at gas stations, or shopping at stores, make sure that you see your credit card transaction being processed. Don’t lose sight of your card because unscrupulous individuals only need a few seconds to clone your card or take a photo of your credit card details.

Furthermore, always double check your sales slips with every purchase to make sure that you have been charged with the correct amount. If there’s a transaction that you did not make, report it to your card issuer immediately.

Pay your credit card bill in full

It’s very tempting to just pay the minimum amount due. But doing so will only make you pay more because you’ll be raking up interest charges.

Every day that you delay your full payment, interest accrues. So if your budget permits, pay your outstanding balance right away.

And the only way you can pay your credit card in full is by buying only the things that you can afford to pay within the month.

Check your charges

Make sure that you made all the transactions. If there’s a charge that’s not yours, report it to your bank immediately. The sooner you report the issue, the quicker the resolution will be to reverse the charges or block the card to prevent further use.

Use it only for convenience

It’s called a credit card for a reason. Remember that with every swipe of your card, it’s money that you owe to the bank.

Nope, it’s not free money, nor is it extra cash. Use it only because you don’t want to carry a huge amount of cash in your wallet, or because you don’t like the inconvenience of looking for an ATM when you shop or dine out.

Don’t have too many credit cards

If you’re a first-time credit cardholder, having one card should be enough. Keep your balance low by making regular and on-time payments. This should build you a good credit score which can help you find and get approved for another credit card in the future. Hopefully, one with better rates, terms, and rewards.

Final Thoughts

Lots of people survive without a credit card because they can afford to pay in cash. Some people even veer away from credit cards because they don’t want the temptation of spending that comes with having one.

But there are many benefits to having a credit card, too. There are rewards that you just can’t get when you buy in cash, and there are installment plans that are very helpful for big purchases.

A credit card is a major responsibility. But with discipline and with fully understanding how your credit card works, it can also be a beneficial financial tool.


What’s your very first credit card, and what was your very first credit card purchase? Let us know in the comments!