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Getting the very first credit card is a sign of financial independence. It shows that you are creditworthy enough for the financial institution to issue a card in your name. Moreover, the first credit card is also the first step into your credit profile. 

If you do not use the card wisely, you might end up experiencing more drawbacks than benefits. So, here are some do’s and don’ts of using your first credit card.

Do’s -

Find the right card:

There are different types of credit cards available in the market – lifestyle based cards, shopping cards, travel cards, premium cards, etc. Choose a card that matches your spending pattern for earning the maximum reward points.

Maximise the reward potential:

Every credit card has a reward programme. Understand the program completely. Use the program to your advantage so that you can earn the maximum reward points and then redeem them for attractive benefits.

Look for lower fees and charges:

In your enthusiasm to get the card, don’t ignore the fees and charges. Compare the available cards and opt for one that has the lowest charge structure, both in terms of interest rates and other charges associated with the card.

Don'ts -

Default on the bill:

Never be late on credit card bill payments or miss the payments entirely. Defaulting attracts high-interest rates and also damages your credit score. Click here to read more about Credit Score.

Pay only the MAD:

The Minimum Amount Due (MAD) is a fraction of your credit card bill that you can pay and then carry a forward balance to the next billing cycle. Though paying the MAD doesn’t affect your credit score, it attracts a high-interest charge. Moreover, you won’t be able to enjoy the interest-free credit period in the next billing cycle. 

Withdraw cash:

Credit cards can be used at ATMs to withdraw cash in emergencies. However, such withdrawals attract a fee and also an interest rate.

Opt for the EMI facility:

Credit cards allow you to convert your big-ticket purchases to easy EMIs. Though tempting, try and avoid it as EMI conversion incurs a charge and you also pay interest on the amount converted.

Spend beyond affordability:

Since credit cards allow credit purchases, you might be tempted to spend beyond your affordability. Avoid this at all costs. Remember, you would have to foot the bill later on and if it is unaffordable, you might default, incur high interest and fall into a debt trap.

Use your credit card wisely to maximise its benefits and avoid possible pitfalls.