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3 mistakes people make when they get their first credit card

July 04, 2021
6 min read
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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.

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Overspending

(Photo courtesy of Hero Images via Getty Images)
(Photo courtesy of Hero Images via Getty Images)

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

Image courtesy of 1820796/ Pixabay.
(Image courtesy of 1820796/ Pixabay)

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.

Related: TPG’s 10 commandments of credit cards

Getting a card without rewards

(Photo by Isabelle Raphael / The Points Guy)
(Photo by Isabelle Raphael / The Points Guy)

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.

Related: What you need to know about credit card debt — and how to get out of it

Bottom line

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.

Once you get your credit card house in order, you can start applying for ones that offer rewards to use on hotels, flights and vacations.

Additional reporting by Carissa Rawson

Featured image by (Photo by Antonio Guillem/Shutterstock)
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

TPG featured card

Best starter travel card
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards

1 - 3X points
3XEarn 3 Points per $1 spent at Restaurants and Supermarkets
3XEarn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels
1XEarn 1 Point per $1 spent on all other purchases

Intro offer

Earn 80,000 ThankYou® points60,000 points
For a limited time, earn 80,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening

Annual Fee

$95

Recommended Credit

670-850
Excellent, Good
Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

Why We Chose It

The Citi Premier’s 3 points per dollar spent across a wide range of popular categories is one of the more lucrative offerings in the world of points and miles. The Citi Premier comes with a $95 annual fee and is currently offering a solid sign up bonus of 80,000 points after you spend $4,000 on purchases within the first three months. It also has some valuable transfer partners to make the most of your rewards. Add in access to Citi Entertainment plus a $100 hotel credit for any single-stay hotel booking that exceeds $500 or more, excluding taxes and fees, booked through the Citi travel website, there are few reasons why the Citi Premier should not be in every traveler’s wallet.

Pros

  • Earns 3x points on restaurants, supermarkets, gas stations, air travel and hotels.
  • $100 annual hotel savings benefit (on single hotel stay bookings of $500 or more, excluding taxes and fees, booked through thankyou.com)
  • Points transfer to 16 airline programs, from JetBlue to Virgin Atlantic.
  • World Elite Mastercard benefits, extended warranty, damage and theft protection.

Cons

  • $95 annual fee
  • Lacks travel protections that other travel rewards cards come with
  • For a limited time, earn 80,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening
  • Earn 3 Points per $1 spent at Restaurants and Supermarkets
  • Earn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels
  • Earn 1 Point per $1 spent on all other purchases
  • Annual Hotel Savings Benefit
  • 80,000 Points are redeemable for $800 in gift cards when redeemed at thankyou.com
  • No expiration and no limit to the amount of points you can earn with this card
  • No Foreign Transaction Fees on purchases
Best starter travel card
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards Rate

3XEarn 3 Points per $1 spent at Restaurants and Supermarkets
3XEarn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels
1XEarn 1 Point per $1 spent on all other purchases
  • Intro Offer
    For a limited time, earn 80,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening

    Earn 80,000 ThankYou® points
    60,000 points
  • Annual Fee

    $95
  • Recommended Credit
    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    670-850
    Excellent, Good

Why We Chose It

The Citi Premier’s 3 points per dollar spent across a wide range of popular categories is one of the more lucrative offerings in the world of points and miles. The Citi Premier comes with a $95 annual fee and is currently offering a solid sign up bonus of 80,000 points after you spend $4,000 on purchases within the first three months. It also has some valuable transfer partners to make the most of your rewards. Add in access to Citi Entertainment plus a $100 hotel credit for any single-stay hotel booking that exceeds $500 or more, excluding taxes and fees, booked through the Citi travel website, there are few reasons why the Citi Premier should not be in every traveler’s wallet.

Pros

  • Earns 3x points on restaurants, supermarkets, gas stations, air travel and hotels.
  • $100 annual hotel savings benefit (on single hotel stay bookings of $500 or more, excluding taxes and fees, booked through thankyou.com)
  • Points transfer to 16 airline programs, from JetBlue to Virgin Atlantic.
  • World Elite Mastercard benefits, extended warranty, damage and theft protection.

Cons

  • $95 annual fee
  • Lacks travel protections that other travel rewards cards come with
  • For a limited time, earn 80,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening
  • Earn 3 Points per $1 spent at Restaurants and Supermarkets
  • Earn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels
  • Earn 1 Point per $1 spent on all other purchases
  • Annual Hotel Savings Benefit
  • 80,000 Points are redeemable for $800 in gift cards when redeemed at thankyou.com
  • No expiration and no limit to the amount of points you can earn with this card
  • No Foreign Transaction Fees on purchases