Here are a few tips to consider as you get your first credit card:
1. Choose the best card for your needs.
Shop around for options that suit you. Research the rates, fees and rewards that come with each card. (FYI – Purdue Federal cards have low, fixed rates, which means your rate won’t increase!) While being new to building credit may mean you’re not yet eligible for cards with huge perks, you can still find one that works for you.
Cards without annual fees, student cards and cards designed for people with fair credit are all great options. But, be sure to read the fine print, especially when it comes to the maximum rewards you can actually earn.
2. Don’t max out your credit limit.
Maxing out your credit limit is definitely bad, but you may want to use your card even less than you think. We recommend watching your utilization rate.
Your utilization rate is the amount of your credit limit you’re using. For example, if you’ve spent $200, and your credit limit is $1,000, your utilization rate is 20%. It’s usually recommended to have a utilization rate below 30%.
3. Pay on time and in full.
Making your payments on time is vital. Late fees, penalties and damage to your credit can all be results of late payments. Letting even a small payment slip by can lead to big problems.
So, if you’re able, paying off your credit card each month is a good idea. While you’ve probably tried to choose the best rate for you, you won’t ever have to pay interest if you pay your full balance each month.
4. Review your statements regularly.
It’s important to review your monthly statement. Even if you have automated payments or you use your card rarely, it’s good to check for any mistakes or unauthorized charges so you can take action immediately.
Digital banking helps make this even easier. You can log on and check your recent credit card charges anytime, anywhere.
To protect yourself even more, be sure to choose a card that offers fraud alerts. At Purdue Federal, our cards are automatically enrolled in real-time fraud text alerts, so you can report fraud as soon as you’re aware.
5. Don’t be afraid to use it.
Using your credit card and paying it off is a great way to build your credit. While you don’t want to overspend or buy things you actually can’t afford, it’s good to make (and pay off) small, regular charges.
Credit cards are a great asset in an emergency and for establishing credit for your future. Consider these tips as you choose and use your first credit card.
Want to learn more about Purdue Federal credit cards? Click here.