Credit cards are an essential asset in the modern age — giving holders perpetual access to borrowed money, with a limit. Navigating credit card usage requires discipline and awareness in users, as the temptations of having an illusory increase in income are hard to reign in. With knowledge, you can traverse credit like a skilled professional.

Choosing and Obtaining Your First Credit Card

The first and most crucial step to responsible credit card usage is knowing your credit score. Free services are available to do this, such as Credit Karma, Nerd Wallet and Credit Sesame — however, many online banking services also offer a free credit check.

If you want more detailed insight into your credit score, you can obtain a credit report once per year from each of the major credit bureaus — TransUnion, Equifax and Experian.

Once you have your number, each of these resources should provide you some insight into what your score range means and how you can improve it:

• Poor: 300-579
• Fair: 580-669
• Good: 670-739
• Very Good: 740-799
• Exceptional: 800-850

Certain credit cards require you to have a minimum score to apply. Use credit analysis resources to help determine which cards are within your range — though pre-approved offers do not guarantee approval for any card. There are unsecured cards, with all funds available immediately, and secured cards — great for beginners — that require a deposit to help determine credit limit.

You can either apply at your current banking institution or look elsewhere. No matter what, you must read the terms and conditions. Familiarize yourself with the payment schedule, cashback allowance, late penalties and annual percentage rates (APR).

The creditor will offer an interest rate with the application. Sometimes this is at a fixed rate, or it is based on your creditworthiness, sometimes over 24% every month. Some cards offer introductory 0% interest rates — which can sound attractive to new users — but this does not last forever, and interest rates will accumulate.

Tips for Maintaining Low Balances

To avoid maxing out your credit card by purchasing frivolous items in the first month, here are some fundamental tips for keeping your balance low:

• Pay off balances every month: Some even get into a habit of paying off purchases immediately after buying. An easy way to do this is only putting purchases on your card you would be buying anyway, like phone bills or gas. That way, it’s easy to earn the benefits of having a credit card, like points or air miles, while engaging in your everyday financial routines.
• Make intentional purchases: Instead of making impulse purchases, write the items you consider down. Evaluate them for weeks, maybe months. Most realize that urge fades after a short time, and they don’t want it anyway. Smart budgeters often create a list of items they want and ignore everything else.
• Keep a low utilization rate: This refers to the percentage of credit you have used compared to how much you are allowed to spend. For example, if your credit card has a limit of $1,000 and you’ve used $300, you are at a 30% utilization rate. This is the ideal number to stay under.
• Understand the terms: There is more than interest rates. Some cards have annual fees over $100. If you travel internationally, are you able to use that card abroad — and will it account for the exchange rate?
• Don’t open too many cards at once: Speaking of credit utilization, it might be tempting to open many cards to increase your credit ceiling. More credit cards only encourage more lavish spending. It is advisable only to keep one credit card at any time.

Always remember it takes no time to max out a credit card, but it could take years to get it back down to zero — this is why over 50% of Americans have a range from $1,000 to over $10,000 in credit card debt.

Best Financial Security Practices

Every credit card holder should know a few significant scams and security practices.

The first is direct mail offers, which usually contain a mock credit card with a promotional code, promising high chances of acceptance upon signing up. If you throw them in the trash, shred or tear up the papers thoroughly. People can get ahold of those numbers, use your code and affect your credit.

Unfortunately there are scams, but sometimes they look like already well-known techniques. As with other financial frauds, be aware of robocalls, skimmers, and hotspot scams. If you’re ever second-guessing yourself about giving information, reach out to the creditor directly to inquire about the validity of offers or if you should provide information.

As you would with any of your other accounts containing sensitive information, use best password protection practices when managing your credit card online accounts.

Responsible Credit Card Usage

Getting your first credit card can be exciting as it can be a relief — especially if you need to make an unexpected, emergency purchase. Always do your research and practice caution and self-restraint when using them. They are an excellent tool, so start strong to stay ahead of the game.