Credit Etiquette For First Time Card Holders

Living on credit is a way of life for most of us. When we want to make a purchase but don't have the money to cover it, that little piece of plastic in our wallet can be all too tempting. Credit cards can make life so much easier - if we use them responsibly. Thoughtless, frivolous spending can lead to a mountain of debt that feels impossible to scale.

If you've received many offers of credit in the mail, you know how easy it is to be seduced by the easy terms and other marketing gimmicks on the envelopes. But the truth of these offers is on the inside of the letter, and often written in small print. There you will find hidden fees coupled with high interest rates and rules that can change at the creditor's whim. Still, it's hard to refuse a credit card when someone really wants to give you one.

A little preparation can enable you to accept those offers of credit without the fear of digging yourself into a financial hole. If this is your first credit card, look to friends and family for credit etiquette. They can be good examples of how to handle your new credit limit, or they can serve as reverse role-models - living proof that you do not want to live beyond your means.

The first thing you need to do when you get a credit card is to look at your budget. Make a simple ledger or spreadsheet that lists your monthly income as well as your outgoing bills. Credit card interest rates can range from 15-30%. If you make purchases on the card, be sure that you can afford to pay them off each month. If the debt lingers from cycle to cycle, interest payments will make that purchase cost more than it's worth.

Next, list your bills in order of priority. You have to pay for food, power, and lodging before you pay for credit cards. If your monthly necessities leave you little financial wiggle room, you might want to avoid using the credit card except in emergencies.

What if you've already accumulated a heap of debt? Start fixing it right away. Call your creditors, explain your situation, and see what they can do to help. Some lenders will grant a forbearance for a month or so, while others will accept partial payments. Make a good faith effort to take care of your debt, and establish a relationship with your debtors. Make sure they have current contact information, and don't put them through the trouble of calling you first. Instead, be proactive. Let lenders know when you face financial hardship. If you get in touch with them, they'll know that you care about paying off your debt - and they won't hassle you so much.

These simple strategies can be put to use by anyone who has, or is thinking of acquiring, a credit card. Credit cards aren't free money. Spend only what you can afford to spend, and stay in touch with your creditors if problems arise.