TUKWILA, Washington, August 27, 2024 (Newswire.com) –
Credit cards can be a tool for achieving financial goals because they help build credit and provide access to a number of benefits. But with so many options, it can be difficult to know where to start, especially if you’re new to using a credit card.
To help you make a more informed decision, here are three tips for first-time credit card users.
1. Understanding credit scores
Before applying for a credit card, learn how to build your credit score. A good credit history and high credit score can lead to numerous benefits, including premium cards that offer rewards and higher credit limits. A higher credit score could also help you get loans at lower interest rates. To maintain a good credit score, pay off the credit card each month and use 30% or less of the balance.
2. Explore credit card options
It can be difficult to get a credit card if you have limited or no credit history. A secured credit card is an excellent option for first-time users who want to build credit from scratch. These cards require a security deposit and usually start with a lower credit limit. Secured credit cards can be especially beneficial for users with limited or no credit history and for users recovering from a financial setback.
3. Learn general credit card concepts
Understanding the key terms will help when applying for your first credit card.
Credit card interest rate or APR (annual percentage rate): The annual credit card cost, which is charged on any balance not paid in full each month. This rate may be fixed or variable and is often compounded daily, increasing the amount owed over time.
Credit card fees: Fees for late payments, cash advances, foreign transactions and annual fees are common. These vary by card and affect the total cost of the credit card.
Credit card benefits: These can include cash back, discounts, and travel benefits. Be wary of some loyalty programs, as a 2024 study found that as credit card rewards increase, so do fees.
Take the next step
Work with a financial institution or open a credit union account online to explore options and choose the credit card that best fits your financial goals. With these steps, users can begin to effectively manage their first credit card and work toward a stable financial future.
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About BECU
BECU is federally insured by the NCUA and is an Equal Housing Opportunity Lender (Boeing Employees’ Credit Union NMLS ID 490518). With nearly 1.5 million members and $29.9 billion in assets, BECU is the largest not-for-profit credit union in Washington and one of the four largest financial cooperatives in the country. As a member-owned credit union, BECU is focused on improving the financial well-being of its members and communities through great interest rates, low fees, community partnerships and financial education. The credit union currently operates more than 60 financial centers, including two in South Carolina.
Source: BECU
