If you want to apply for a credit card, but you don’t know how they work or what you should take into account for their use, here we explain the things you need to know before taking out a credit card for the first time.
What is a credit card used for
Credit cards are a mode of financing in which the bank lends us a certain amount of money to make purchases and other expenses with the power to pay later along with interest and commissions. It is also very useful for making payments online .
The importance of your first credit card
Your credit history is very important when acquiring other loans and cards with larger loan amounts, so it is very important that you know how to manage your first credit card in a moderate way in order to have a stable credit score. and trustworthy so the bank will trust you more and you will be able to access better loans in the future.
Know the basics
Interest rate : the bank lends you money through your credit card and then you have to pay what you spent together with an amount of money called interest. All banks have different interest rates.
Minimum payment: it is the minimum amount of money that you must pay monthly according to each bank. It is advisable to pay more than the minimum fee to obtain a good credit score.
Deadline: is the deadline to make the full or deferred payment, usually one day each month. If you miss this date without making the payment, the bank charges the interest plus a commission for late payment.
Correctly select your payment method
Credit cards have the particularity of being able to delay payment in two ways. That is why you must know how to differentiate these forms and here we explain what they are:
- Total payment: with this form the total payment of your purchases is delayed at the end of each month without paying interest.
- Deferred payment: this mode allows you to pay a minimum installment along with interest for a period of several months until the product is paid in full.
How to use your credit card correctly
You should always keep in mind that it is actually money that the bank has lent you and must be paid like any other debt. So it is extremely important to handle it responsibly and moderately.
Always keep in mind the payment deadline , some payments take a few days to become effective so it is advisable to pay a few days before the limit milk, otherwise it could damage your credit history and you will have to pay interest that with the passing the months will become very difficult to pay.
If it seems likely that it will be very difficult for you to pay the installments before the time limit expires or that you will not be able to stop yourself from spending more than necessary, it is better that you cancel it so that you do not exceed it and end up owing more than you can pay .
Apply for only one card at a time
If you get two credit cards at the same time, it will be very difficult not to lose control of what you owe and how you are going to pay it, so it is better to have only one. Another thing that can be considered a common mistake is to use your credit card only for emergencies, since at the end of the year you will be charged fees for non-use along with the annual interest.
How to keep your card safe
Constantly review the account statements and keep the receipts in case you see purchases that you did not make, so you can make claims before the deadline to make claims expires and you can cancel them .
Never put your password written on the card or choose a password such as your birth or some other important date that is easy to find out, so you will avoid your information being stolen
