5 tips for your first credit card

Getting your first credit card feels like a milestone. It is also the start of your credit history, the record lenders will look at years from now when you apply for a car loan or home finance. The good news is that building a strong history is mostly about a few simple habits. Here are five we share with every new cardholder.

1. Pay the full balance whenever you can

Most cards give you an interest-free period, often up to 50 days, if you pay the whole statement balance by the due date. Pay only the minimum and interest is charged on the rest. On a card that charges 2.25% a month, that adds up to more than 27% over a year. Treat the card like a debit card that happens to give you a few extra weeks.

2. Start with a limit you are comfortable with

A higher limit is not a reward. It is a responsibility. Our Student Credit Card starts from JOD 150 and our Classic Credit Card from JOD 500 for good reason. A modest limit lets you learn how your spending feels on a card without the risk of a balance you cannot clear.

3. Keep your usage low

Lenders like to see that you do not rely on credit. A good rule of thumb is to use less than a third of your limit at any time. If your limit is JOD 900, try to keep the balance below JOD 300. If you often go above that, pay part of the balance before the statement date.

4. Know the fees before you need to

• Late payment fees apply if the minimum is not paid on time.
• Cash withdrawals usually carry a fee and interest from day one.
• Spending in foreign currency often carries a foreign transaction fee.
• Replacement cards and paper statements may have small charges.

Read the fee table on your card's page once, and you will avoid most surprises. Using a card for cash withdrawals is almost always the most expensive way to get money.

5. Guard your card like cash

Never share your card number, expiry date, security code or one-time passwords with anyone, including callers who say they are from the bank. A real bank will never ask for them. Turn on transaction alerts in the app, and freeze the card immediately if you misplace it. You can unfreeze it just as quickly if it turns up.

A final word

Your first card is a chance to show that you handle credit well. Pay in full, keep usage low, understand the fees and protect your details. Do that for a year and you will have the start of a credit history that opens doors later. If you ever feel a balance is getting away from you, talk to us early: moving it to a fixed instalment plan is far cheaper than letting interest build month after month.

Lanternvale Bank is fictional and this article is written for software testing. Figures are examples only.