Getting a new credit card in the mail can be exciting, particularly if you only have a few at home. Opening the envelope and pulling out the new piece of plastic with your name on it and the buying power that comes with it is exciting, but make sure to be responsible when you get a new card.
Set Bill Reminders
The first thing you should do when you get a new card is signing up for online access and turn on email reminders when your bill is due. Setting up a system of reminders will help you keep from missing a payment.
Missed payments result in fees and potentially higher interest rates. They also lower your credit score, which can keep you from getting new credit in the future or raise the cost of a loan.
Note: Still incurred a late fee or other credit card fees? Consider using an app like Cushion to help get your money back! Click the link to learn more about this app.
Pay In Full Every Month
Don’t just pay your bill each month, pay it in full. Paying your bill 100% in full each billing cycle means you don’t pay any interest at all. You only pay interest on outstanding balances at the end of the billing cycle, so save yourself the money by paying it in advance.
Never buy anything you can’t pay for in full with cash and find a system that works well for you to keep your credit cards under control. I pay my bill in full each payday to make sure I’m always on top of the bills before they arrive and to match my income with my expenses.
Read the Fine Print
The fine print is boring, but skipping it can cost you big. You can miss out on great benefits like bonus miles, rental car insurance, a free concierge service, purchase protection, extended warranties, and more.
On the bad side, you could miss important terms relating to what the card costs you and end up paying unexpected costs and fees. The fine print for credit cards may even protect you from the credit card company if something goes wrong.
Put Annual Fee Reminders on Calendar
If your card carries an annual fee, it is important to decide each year if you are getting enough value for the fee to keep the card open.
I have more than one card with a fee, and I put a reminder on my calendar a few weeks before the fee date to decide if I want to keep the card open. If I don’t, I call the bank and have the account converted to a no-fee version and throw the card in the back of a drawer.
Keep It Open
Unless it has a big annual fee, always keep your accounts open as long as possible. The average age of accounts and your open credit limit are two factors that impact your credit score, so always keep your cards open unless they cost you money.
Be smart with new credit and always pay your bills on-time and in-full and you will have a great credit experience.
Do you have any credit card horror stories that these tips would have prevented? Please share in the comments.
Image by Sean MacEntee / flickr.