3 mistakes people make when they get their first credit card
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.
Editor’s note: This is a recurring post, regularly updated with new information.
We here at TPG love our credit cards. From massive sign-up bonuses to increased consumer protection, no matter what you’re looking for, there’s a credit card out there for you. But like many of you, I started my credit card journey right after I graduated from college (it was a Sears card!) with no clue how they worked or how I should use them — and I paid for it dearly. Here are three top mistakes people make (including myself) when they get their first credit card.
But you can avoid the hard credit cards lessons I had to learn. Here are three top mistakes people make (including myself) when they get their first credit card — and how to avoid them.
New to The Points Guy? Want to learn more about credit card points and miles? Sign up for our daily newsletter.
If you’ve spent all your life using cash or a debit card, you’ll likely experience some shock the second that plastic falls into your hands. Why? Because when you use your cash, it’s gone. Similarly, transactions are deducted in real-time (or near real-time) from your debit card, which means you can both see (and feel, with overdraft charges) when your account goes into the red.
The same cannot be said for credit cards, which have limits ranging upwards to the tens of thousands. Now, if you’re anything like me, you probably received your first card, got dollar signs in your eyes, and promptly maxed it out on some impulse purchase (mine was a 26-inch television and a VCR with a wired remote control).
As I was working at my first full-time job with a tiny salary and supplementing that with a part-time job at a retail store, there was absolutely no way I was going to pay it all off when my statement came due, which leads to my second mistake:
Only making minimum payments
Like I stated above, as soon as I got my first credit card, I went wild — and that’s normal. And it also doesn’t feel real since you swipe that card and forget about that looming monthly bill. Without someone teaching me about fiscal responsibility, there was absolutely no reason why I would know not to spend all that money. Unfortunately for me, a reality check came in the form of my balance due at the end of the month — which was a real shock.
With thousands of dollars racked up on my credit card and not being paid enough to cover the entire bill, I resorted to doing what most people do — I only made minimum payments. I’m sure most of you are cringing right now and so am I. With interest rates as high as 30% (or more!), making minimum payments on your credit card becomes very costly very quickly.
Using a credit card instead of cash due to its additional benefits is only the best option when you can pay your bill in full each month. Otherwise, you’re simply losing money to interest payments.
Getting a card without rewards
As it stands, I’m a regular credit cards guru. I can list you the benefits of my favorite travel cards and recommend the best card for Amazon purchases without breaking a sweat. But when I got my first card? I walked into my local bank and signed up for the card featured on its brochure, which was marketed to first-time cardholders.
Unfortunately, that meant I was putting all my spending on a credit card that gave me nothing in return. No points, no cash back — all I was doing was spending money I didn’t have and paying interest as a result.
It can be difficult for those without established credit to acquire top-tier rewards cards – I’m not debating that. Often, banks will want a credit history and a proven track record of paying your debts. But that doesn’t mean that you can’t get a rewarding card. There are tons of credit cards available to those just starting to get into the rewards card game. Often, they’re mid-tier cards with lower annual fees and moderate sign-up bonuses, but either way, they’re miles ahead of that debit card you’ll otherwise be holding.
It’s easy to fall into the credit card trap, but avoid these mistakes and save yourself some money while not leaving any cash on the table. Check your credit score regularly — for free — to make sure there are no mistakes that could hurt future card applications. Put the brakes on your card spending until you can eliminate the balance. Learn the right way to pay your credit card bills.
Featured image by Antonio Guillem/Shutterstock
Additional reporting by Carissa Rawson
Welcome to The Points Guy!
Earn 50,000 bonus miles and 5,000 Medallion® Qualification Miles (MQMs) after you spend $2,000 in purchases on your new card in your first three months of card membership. Plus, earn up to $100 back in statement credits for eligible purchases at U.S. restaurants with your card within the first 3 months of membership.
With Status Boost™, earn 10,000 Medallion Qualification Miles (MQMs) after you spend $25,000 in purchases on your Card in a calendar year, up to two times per year getting you closer to Medallion Status. Earn 3X Miles on Delta purchases and purchases made directly with hotels, 2X Miles at restaurants and at U.S. supermarkets and earn 1X Mile on all other eligible purchases. Terms Apply.
- Earn 50,000 bonus miles and 5,000 Medallion® Qualification Miles (MQMs) after you spend $2,000 in purchases on your new Card in your first 3 months.
- Plus, earn up to $100 back in statement credits for eligible purchases at US restaurants with your card within the first 3 months of membership.
- Accelerate your path to Medallion Status, with Status Boost®. Plus, in 2021 you can earn even more bonus Medallion® Qualification Miles (MQMs) to help you reach Medallion Status.
- Earn 3X Miles on Delta purchases and purchases made directly with hotels.
- Earn 2X Miles at restaurants worldwide, including takeout and delivery and at U.S. supermarkets.
- Earn 1X Miles on all other eligible purchases.
- Receive a Domestic Main Cabin round-trip companion certificate each year upon renewal of your Card. *Payment of the government imposed taxes and fees of no more than $75 for roundtrip domestic flights (for itineraries with up to four flight segments) is required. Baggage charges and other restrictions apply. See terms and conditions for details.
- Enjoy your first checked bag free on Delta flights.
- Fee Credit for Global Entry or TSA Pre✓®.
- Enjoy an exclusive rate of $39 per person per visit to enter the Delta Sky Club® for you and up to two guests when traveling on a Delta flight.
- No Foreign Transaction Fees.
- $250 Annual Fee.
- Terms Apply.
- See Rates & Fees