How Should You Use Your First Credit Card

If you don’t have a credit score you will not be able to obtain important goods such as the so called “durable goods” (a house, a car, appliances, etc.). I have only met two people who did not buy on credit, who when they wanted to acquire products such as home furnishings or even a car saved until they had all the capital for their goal and thus bought it “in cash”.

Saving in this way is the same as paying a credit in the sense that every two weeks these two people saved a fixed amount of their salary to achieve the purchase they wanted. The problem was when almost 10 years later one of them wanted to acquire his first store credit card, which was obviously denied because he “did not have a credit history” and said “I am a good saver and pay cash, can’t I have a credit card?” and the fact is that if you do not owe someone (or have not made a credit history) you simply do not exist for the financial system and a credit institution has no way of knowing your level of indebtedness, your level of income, or your credit history. Undoubtedly, it would have been a different scenario if this person had applied for his first credit card with the same discipline he used to save, since he would have started his credit bureau profile at a younger age and with that discipline he would have built good references.

Don’t be afraid of credit

Well-managed credit is an excellent tool for (for example) building wealth. Debt is not synonymous with something negative, because when it is used to acquire assets such as a property in which a family can live, it becomes something very positive. It is precisely to achieve important and long-lasting assets that we must manage our credits correctly.

I would say that our first credit card fulfills the function of “initiating” us in the financial world of loans, that is why it is important to do it correctly so that our credit management does not work against us but for us. Below we tell you how to use your first credit card in order to build a good financial reputation:

The first thing you should know is that a credit does not mean having extra money, the money that has a card is the amount that a bank lends you in an open line of credit, that is, for you to use at any time, then as they do not mean extra income you must be sure to be able to pay what you use of it.
Check the interest rate so you know what you will pay for the financing.
Payment of commissions.
Insurance payments.
Payment for extra statements.
Rewards programs (rewards for using the card).

Things you should never do

Never do the following with your first (and any) credit card:

Pay the minimum, this only increases your debt depending on the interest rate you have accepted.
Stop paying. This brings you bad credit scores and affects your financial reputation.
Forgetting the cut-off date. Knowing this is important to schedule your payments according to your budget. Also, by remembering this information you can finance a purchase for weeks, time that you will have to pay it without pressure.

Undoubtedly, the first credit card opens the door to the financial world and helps you acquire practice in financial education, so making this instrument a good experience will be the result of the good management you make of it.