Getting and Using Your First Credit Card


A "first" credit card can be exciting, tempting and intimidating. Credit cards are a great convenience, but you should keep in mind that when you use them you are borrowing money that must be repaid. Here are some ideas to keep in mind as you get your credit card and use it.

Choosing a credit card - fees, interest rates and benefits
Ideally, the credit card you choose should have the lowest fees, the lowest interest rate and provide the most benefits when you use it. Unfortunately, there is probably no card that has the best of all three. Choosing the card that is best for you involves weighing these factors and considering how you will use it.

Annual fees can vary depending upon where you apply and can be as high as $75 per year. Ideally, you would want to choose a card with no annual fee-like the VISA cards offered at MCU. There are also fees that companies charge for late payments. Be sure to check the terms of the credit card agreement, especially if you are occasionally late with a monthly payment because these can vary as well by institution and you want the best value you can get.

Interest rates can also vary greatly and can exceed 20%. You should also be very careful of low "teaser" rates, or special rates for a limited time if you transfer balances from another card. Another way issuing companies increase the amount you pay is by how they calculate the interest. Be sure to read the details of the agreement.

Many cards offer benefits for using the card. Using a credit card can bring the rewards of airline mileage, discounts on travel, electronic gifts, discounts on cars and other benefits. A rule of thumb is that the benefits are usually worth about 1% of the charges so remember, these benefits are not free. If added benefits are important to you, make you will use, because other important aspects of the card, such as its interest rate, might not make those benefits worth while. A lower rate card from MCU could be a much better choice.

Guidelines for using your credit card

  1. A credit card is serious business. The issuing company is lending you money and you have responsibilities to pay it back.
  2. One card is probably enough. Avoid the temptation by only having one card.
  3. Keep the credit limit low. Depending on how you are going to use it, $500 or $1000 is high enough for most first-time credit card users.
  4. Pay off the entire balance each month. Avoid charges and build a good credit record.
  5. Make the payments on time. This helps build a good record and avoids late payment charges.
  6. Use the card for emergencies. Start off slowly with this new convenience. Keep using cash and checks for most purchases, especially until you get comfortable with the card.
  7. Never let others use your card. You are responsible for all charges on your card. Do not let others borrow it or give out the number.
  8. Keep track of your use of the card and compare your records to what shows up on the monthly statement.