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Owning a credit card can be a brilliant thing: when used properly they can improve your personal credit rating and offer you greater protection on large purchases, especially for things like travel. However, it can be easy for credit card debt to spiral out of control, so we take a look at the three things you should always consider when opening a credit card for the first time.
Nearly all companies check your credit reports and gross annual income level to determine your credit limit. Once you have your limit, don’t be tempted to spend to the maximum amount each month just because it’s there. Only spend what you can realistically afford to pay off each month, as it will further boost your credit rating if you can pay your balance in full each month.
It’s common for credit cards to have offers to tempt customers, with a common offer being 0% APR. If you do open a credit card with a deal like this, make sure you carefully read through the terms and conditions. If you open a credit card with a fixed 0% APR period, set a reminder in your diary for when the deal expires so you don’t get caught out and end up paying much higher interest rates than you signed up for.
Another popular tactic from credit card providers to lure consumers in is to offer additional benefits such as free travel insurance, cash back or air miles. If you genuinely can gain from an advertised perk then do consider it, but don’t get distracted by deals that seem too good to be true. Again, read the small print and terms and conditions very carefully for these additional benefits. There is often a price behind these deals, such as a higher monthly interest rate or a monthly fee, so ask yourself if you truly need any of these.
By taking the time to do a little research, you can find a credit card that truly benefits you and won’t catch you with any hidden surprises.