By Linda Williams
Often, the conversation surrounding credit card ownership is filled with grim warnings and debt-filled horror stories. For first-time owners, this can be daunting as they aim to form good credit habits in a sea of destructive behaviors. However, while bad spending habits can negatively affect your score, there are sure-fire ways to steer clear of debt-inducing mistakes.
Missed payments, high utilization rates, and partial pay-offs each month can cause your score to plummet, causing many to avoid credit card ownership. Bad spending and payment habits are easy to form and challenging to break, which leaves many wary of opening lines of credit. However, by tracking your spending diligently and practicing responsible usage, you can avoid credit blunders and utilize the numerous benefits bank cards can offer.
Avoid score-tanking mistakes like only making minimum payments or assuming all cards yield similar benefits and set yourself on the path to successful credit card ownership. Responsibly opening credit lines gives you access to the surprising advantages of bank cards.
Step one: Choose your credit card wisely
There is a common misconception that all credit cards are created equal. However, each credit institution offers multiple plans with various benefits and regulations. When picking out the perfect plan for your needs, engage in thorough research to increase your chances of successful ownership. In your research, compare and contrast plan details and read customer reviews. Start by looking up 1fbusa reviews to gain insight into credit-building options.
Banks and credit unions base your score on your financial records and activity. Every time you pay your card in full and on time, your score goes up, which opens up opportunities for lower interest card opportunities down the line. If you plan on using your credit lines to help you purchase big-ticket items in the future, engaging in responsible usage to up your score sets you up for success.
Protection against fraud
One of the most significant advantages of credit cards versus debit cards is increased fraud protection. Unfortunately, credit cards are susceptible to theft, especially with online transactions. If someone happens to get a hold of your card information, protection services guarantee your money is safe and insured. Although banks often insure debit cards as well, it can take time for your funds to return, causing mayhem in your day-to-day life. On the other hand, credit cards offer protection services and restrict liability to around $50, making it the safer and more reliable option.
Built-in grace periods
Although you shouldn’t make a habit of missing payments, credit institutions often offer grace periods for sporadic late installments. Regardless of how responsible you may be, life has unexpected twists and turns that may cause you to be late a month or two. Most reliable banking institutions will allow you to make payments within 30 days and avoid fees and score dings.
They’re universally accepted
If you are a traveler, using your credit card makes everything easier. Both rental services and hotels will place a hold of a few hundred dollars on your card, and if you are using a debit card, it can be a significant inconvenience. By using a credit card instead of your debit, holds won’t affect your ability to spend freely while on vacation.
In addition, credit cards are more universally accepted throughout the world than debit cards are. If you’re traveling in a foreign country and need to spend money, your credit card offers much lower exchange rates for smooth, stress-free transactions.
Most of the items you purchase likely come from online retailers, which means you cannot check for damage or quality before receiving the item. While some sites offer fair return and exchange policies, others may not. In these cases, your credit card can provide you with consumer protection. Your credit card can assist you in returning items, obtaining extended warranties, and in many cases, even doubling a manufacturer’s warranty.
The bottom line
While beginning the journey into credit card ownership can be intimidating and frightening, responsible usage advantages are undeniable. If you clearly outline a payment plan and stay on top of installments, you can reap the benefits and boost your credit score for future endeavors.