The Absolute Beginner's Credit Card Guide

Having at least one or two credit cards is good for building your credit score, but when you get your first one there are some important details you should consider. This article is designed to provide the information you need to use a credit card wisely.

The interest rate associated with your credit card refers to the amount of interest you are charged on any unpaid balance. The interest amount is charged monthly and is added to the unpaid balance on the card. Your credit card statement will specify the minimum amount payable each month, and if it is not paid by the date due, there will be an expensive penalty charge added on. Interest rates vary from extremely high for people with low or no credit rating to as low as 0 percent for those with great credit.

You should apply at one of the major card companies for your first card. If you have reasonably good credit you should be able to get a credit card with a relatively low rate. Your first card may carry an upper limit of $500 to $1000 until you build up a payment history with that company.

Owning a credit card provides the convenience of paying for items without carrying cash or writing checks. A credit card also makes ordering items online very convenient, although you should be careful to only order from a secure site.

If you have a debit card connected to your checking account it can be used in place of a credit card. The difference is that the amount is charged directly to your bank account right away. Most credit cards allow 30 days to pay for any charges before interest is added to your balance. If you have no credit score at all and no credit history, your only choice may be a prepaid card. Even if you have to take out a credit card with a high interest rate, using the card and paying the balance right away builds your credit score.

A reward card can have some benefit if you are going to be using the rewards. Most of the time the value can only be used on certain items such as airfare, hotels and other travel related expenses. Some cards offer a percentage discount against gasoline, and that can help with your transportation expenses so long as the balance is paid before interest is charged.

It is always best to share your financial information with your spouse. You may want to get a credit card in your name only, but make sure your spouse knows how much is charged and owed on it.

Your credit debt should be paid within 30 days if you want to avoid paying interest charges. If it is necessary to sometimes carry over some debt, make sure it is paid off as soon as possible. Some cards issued to people with very good credit scores offer interest fee credit for a time period extending up to a year. If this is the case, make sure to pay at least the minimum due every month and pay the full balance before the time period ends.

A credit card company may raise your credit limit once you have demonstrated a good payment history with them.

This information should clear up any confusion you had about credit cards. Credit cards can be used to your advantage if you are careful about making payments on time and avoid carrying too much debt.