by Tom Upton

Created on: June 26, 2008   Last Updated: January 19, 2009

YOUR FIRST
CREDIT CARD

So you received your first credit card in the mail today. You have called the toll-free number to activate the card. You have signed the back of the card.

At this point you are probably experiencing an urge to find a store and to see whether the card actually works. But before you go running out the door, know this : although it may seem like magic that you are now able to buy things without the burden of having to pay actual cash, it really isn't a trick at all. Each time you use your card, always remember: Yeah, I have to pay it back. First-time cardholders often lose sight of this fundamental reality- until they receive their monthly bill, and see that the minimum payment is more than they can afford at the moment.

It takes discipline to use your credit wisely, but the benefits of the prudent use of credit are varied and many.

While regarding your credit, you may want to recall the Hippocratic oath that all doctors must take: first, do no harm.

1. After you received your card, don't run out and buy something just to see whether it actually works.

2. Never give out your credit card number.

3. Never burrow your card to a friend- even a girl friend or boyfriend, especially not a girlfriend or boyfriend.

4. Never use your card just to show off in front of friends.

5. Never use your card to buy things that will last only a short while. You should always buy things that you can use and enjoy for an extended period of time. You never want to find yourself in the position of having to make payments on something that has already worn out and been tossed in the trash, or something that is already lying at the bottom of your closet gathering dust. Charging a restaurant bill may be the most undesirable use of credit: you enjoy the meal of thirty minutes but have to make payments on it for months. Likewise, charging gasoline is never a good idea. (In fact, with the extreme cost of gasoline these days, many gas station owners, for their own reasons, are now refusing to take credit card payments.)

6. Never pay just the minimum payment each month. The lending institutions are scheduling minimum payments so that you are paying mostly interest and barely, if any, of the actual debt. If you can, pay fifty percent over the minimum payment; if the minimum payment is fifty dollars, pay seventy-five. This will help you to pay the actual debt back faster, but it will also help you to build up your credit score.

The truth is how you treat your credit now can affect your life for years to come. It can determine the type of car you will drive, where you live, the quality of upbringing your children will receive and whether or not the go to college, and how you spend your retirement years. It can even determine what jobs you will get; some employers run credit checks on job applicants and will not hire anybody with bad credit. Their reasoning- agree with it or not- is that if a person has bad credit, they have money problems, and if they have money problems, they are much more likely to be dishonest.

So if you really, really need to use your new credit card to buy that cool car stereo, or those hot designer jeans, or those compact discs that should have been in your collection long ago, then, by all means charge it. But always remember, yeah, you have to pay it back. And if you don't pay it back now, you'll pay more dearly some where down the line.

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