5 Things I Learned About Credit Cards Too Late

Are you missing some important credit card knowledge?

Credit cards are an area where the average consumer is somewhat ill-informed. There’s all kinds of misinformation about credit cards, and people often take it to heart.

A lack of knowledge regarding credit cards can have real repercussions, as it can affect your credit score and how much value you get every time you make a purchase. That’s why I’m breaking down the things I learned about credit cards too late and why they’re so important.

1. The sooner you get a credit card, the better

I’m sure I wasn’t the only one who had a negative impression of credit cards as a young adult. Peers would warn each other about high interest rates and the dangers of credit card debt, and I figured there was no good reason to get a card of my own.

The reality is that a credit card is the most effective way to build your credit score. If you take your time getting a credit card, it will take you longer to improve your credit. That means you’ll probably need to get a cosigner for something as simple as renting an apartment, and you could be stuck paying a deposit to get your utilities set up.

Using a credit card responsibly:

• Helps you build your credit.
• Can earn you rewards on your spending.
• Offers more security than cash or a debit card.

For those reasons, it’s smart to get a credit card as soon as you can, even if you need to start with secured credit cards or student credit cards.

2. You shouldn’t waste time earning lackluster credit card rewards

I wised up and got a credit card eventually, and about a year later, I got my first rewards card. I was ecstatic at the prospect of earning points on all my expenses.

However, the card earned a mere 1 point per $1 on all spending, and the redemption options were limited to getting cash back at a value of $0.01 per point or using my points to purchase a product from the card issuer’s rewards shopping portal.

When it comes to credit card rewards, “better than nothing” just isn’t good enough. Had I bothered to research the best credit cards first, I would have found plenty that earned more points per dollar and offered more valuable ways to redeem my points.

3. Don’t get careless with your spending when you’re using a credit card

In the days when I was less financially responsible, I’d carry a credit card balance from month to month. It was nothing crazy, but I was paying interest for no good reason, and it was all because I got careless with my spending.

I made the typical credit card mistakes. I spent money I didn’t have because I figured I’d earn that money by the time my payment was due. I’d guesstimate how much I could afford instead of using a budget. Surprise, surprise -- my guesstimates always painted an overly optimistic view of my finances.

Credit card interest is too high to carry a balance, and that’s why you should always:

• Stick to your budget no matter what payment method you’re using.
• Treat your credit card like your debit card. If you don't have the money in your bank account to make a purchase, then you shouldn’t make it with your credit card.

4. There’s a lot you can negotiate with your credit card company

Like many consumers, I assumed that when a credit card company makes a decision, it’s final, and you’re essentially stuck with whatever terms your card issuer gives you.

That couldn’t be further from the truth. In fact, credit card companies are open to negotiation on quite a few things regarding their cards, including:

• Declined applications -- It’s often possible to get a card issuer to approve your application even after they originally denied it.
• Fees -- Card issuers will waive your first late fee if you ask, and sometimes you can even get a card’s annual fee waived.
• Credit limit -- If you’re not satisfied with your credit limit, your card issuer may be willing to bump it up, which is also a great way to lower your credit utilization.

5. Always pay attention to the terms and conditions

It’s easy to miss key details of credit card offers, and that can end up being costly. I’ve made this mistake before when I mixed up which of my new credit cards had a 0% intro APR offer, which resulted in paying unnecessary interest. It wasn’t that costly, but I did feel like a dunce for making such a simple mistake.

Whenever you’re taking advantage of a credit card offer, make sure you understand all the rules. Here are a few common examples:

• 0% intro APR offers -- These can cover purchases, balance transfers, or both.
• Balance transfers -- You may need to make your transfers within a certain time period to get the intro APR.
• Sign-up bonuses -- It’s important to know the amount you need to spend to earn the bonus, the time frame you need to spend it in, and whether any purchases won’t count towards the spending minimum (some card issuers won’t count purchases of cash-equivalent items, such as gift cards, toward your minimum).

Being smart about credit cards

There’s a lot I wish I had learned about credit cards sooner. If any of the tips above are news to you, use my mistakes as a learning experience so you don’t make them, too.