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What First-Time Credit Card Users Need to Know

Brittney Myers
Cole Tretheway

Our Credit Cards Experts

Ashley Maready
Many or all of the products here are from our partners that compensate us. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page.

Every year, first-time credit card users peel the stickers from their cards and start exploring the world of credit. Unfortunately, many of those new cardholders will wind up with credit card debt and damaged credit because they use cards wrong.

Credit cards can be fun. Convenient, too. Almost anywhere and at any time, you can buy things you want -- whether you can afford them or not. And therein lies the kicker. Without a proper primer on credit cards and credit building, it's all too easy to make costly mistakes.

On the bright side, a little education goes a long way, and managing your credit cards doesn't take an advanced degree in finance. To help, we've put together 10 things first-time credit card users need to know to stay financially healthy.

1. Only charge what you can afford

Don't spend more on your credit cards than you can afford to repay fast. The first-time credit card user may be tempted to go on a swiping spree, but spending beyond your means is a quick way to accidentally drown yourself in debt.

Credit cards are convenient, and that convenience makes temptation irresistible, since all users need for instant gratification is to whip out the plastic.

The solution: Instead of thinking of your credit card as "free money" -- it's a loan -- use your credit cards like debit cards. If you don't have the money in the bank to pay for a purchase, don't put it on your credit card. It's the safest way to spend.

Credit card comparison

We recommend comparing options to ensure the card you're selecting is the best fit for you. To make your search easier, here's a short list of standout credit cards.

Offer Our Rating Welcome Offer Rewards Program APR Learn More
Rating image, 4.50 out of 5 stars.
4.50/5 Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair
= Poor
20,000 ThankYou® Points Circle with letter I in it. Earn $200 cash back after you spend $1,500 on purchases in the first 6 months of account opening. This bonus offer will be fulfilled as 20,000 ThankYou® Points, which can be redeemed for $200 cash back. Up to 2% cash back Circle with letter I in it. 2% cash back: 1% when you buy plus 1% as you pay

Intro: Circle with letter I in it. N/A

Purchases: N/A

Balance Transfers: 0%, 18 months

Regular: 19.24% - 29.24% (Variable)

Rating image, 5.00 out of 5 stars.
5.00/5 Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair
= Poor
Best for cash back on rotating categories
Discover will match all the cash back you've earned at the end of your first year. Circle with letter I in it. N/A 1% - 5% Cashback Circle with letter I in it. Earn 5% cash back on everyday purchases at different places you shop each quarter like grocery stores, restaurants, gas stations, and more, up to the quarterly maximum when you activate. Plus, earn unlimited 1% cash back on all other purchases—automatically.


Purchases: 0%, 15 months

Balance Transfers: 0%, 15 months

Regular: 18.24% - 28.24% Variable APR

Rating image, 5.00 out of 5 stars.
5.00/5 Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair
= Poor
Best for cash back
Up to $300 cash back Circle with letter I in it. Earn an extra 1.5% on everything you buy (on up to $20,000 spent in the first year) — worth up to $300 cash back. That's 6.5% on travel purchased through Chase Travel℠, 4.5% on dining and drugstores, and 3% on all other purchases. 1.5% - 5% cash back Circle with letter I in it. Enjoy 5% cash back on travel purchased through Chase Travel℠, our premier rewards program that lets you redeem rewards for cash back, travel, gift cards and more; 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and 1.5% on all other purchases

Intro: Circle with letter I in it. 0% Intro APR on Purchases and Balance Transfers for 15 months

Purchases: 0% Intro APR on Purchases, 15 months

Balance Transfers: 0% Intro APR on Balance Transfers, 15 months

Regular: 20.49% - 29.24% Variable

2. Make your payments on time

If you retain nothing else from our list, let it be this: Make your credit card payment on time every month!

If you only charge what you can afford, you can pay your credit card bills off in full each month -- and you should absolutely do so. But, even if you happen to fall a little short of your full balance one month, make at least your minimum payment before (not on, before) your due date.

That's not to say first-time credit card users should live in terror of being a day or two late. Being a few days behind will mean late fees and, with some cards, a hike in your APR (called a penalty APR). But it won't hurt your credit.


What is APR?

APR is short for annual percentage rate. It's the yearly cost of borrowing money.

However, if you fall 30 or more days behind, that late payment becomes a delinquency, and that delinquency ends up on your credit report. Your payment history has a huge impact on your credit score, and even a single delinquent payment can hurt your credit for up to seven years.

First-time credit card users should consider setting up automatic payments. This will ensure you don't miss a payment, even at your busiest or most forgetful. So long as you have funds in your bank account, you'll be okay.

3. Don't make minimum payments only

When we say make at least the minimum payment on time every month, the "at least" is doing a lot of work. Failing to pay your credit bill 100% is asking for trouble.

Most credit cards have what's known as a grace period, the time from when your statement closes to when your bill is due. If you pay off your full balance before the end of the grace period -- i.e., before the due date -- you won't be charged any interest.

But if you only make minimum payments, you'll start accruing interest on the remaining balance -- and that interest adds up fast. The hard truth for first-time credit card users is the "minimum payment" feature is designed to make your card issuer money on interest fees.

First-time credit card users who swipe first and budget later can find themselves underwater in zero seconds flat. Avoid the interest-fee trap by repaying credit debt 100% each month.

4. Know what to charge -- and what to avoid

When all you have is a hammer, every problem looks like a nail. Many first-time credit card users think of their cards as a one-size-fits-all solution to any money problem. Spoiler alert: They're not.

It is usually a bad idea to put all of your expenses on a [credit] card. That can lead to a false sense of how much cash you have (because you're not spending cash during the month but owe a lot at the end). It can also make expenses seem less real.

D'Arcy Becker, Ph.D.

Things you probably shouldn't put on a credit card:

  • Long-term debt
  • Utilities, rent, and mortgages
  • Lottery tickets, bets, and money orders

Long-term debt: The vast majority of your everyday purchases can be bought with credit, no problem. However, some things simply shouldn't be put on plastic. For instance, your credit card is a poor place to put long-term debt -- that's what loans are for.

Processing fees: Many companies charge credit card processing fees. Think twice before using your credit card on utility bills, rent, or mortgage payments. These fees can tack an extra 2% to 3% onto your bill.

Cash advances: First-time credit card users should also note that purchases that could be considered a cash equivalent -- such as lottery tickets, bets, or money orders -- are often treated as cash advances by your credit card company. Cash advances come with transaction fees and start accruing interest the second they hit your account.

MORE INFO: See The Ascent's guide on whether you can buy lottery tickets with credit cards.

5. Choose your cards carefully

First-time credit card users can be lured in by sign-up bonuses and the prospect of big rewards, but every card has its fine print. Read carefully.

Some stores offer store credit cards at checkout. They're tempting; after all, who doesn't want to save $20 on a store purchase today? But there's a catch: store credit cards tend to have astronomical interest rates. Plus, most store cards -- and their rewards -- can only be used to make purchases at those stores.

For your first credit card, you'll have limited options. Student credit cards offer students good rewards. If you're not a college student, consider a secured credit card. Secured cards are just like any other credit card except they require a fully refundable deposit to open. Some secured cards even offer purchase rewards.

First-time credit card users should limit how many new cards they open. Opening a new credit card has a credit score implications. Simply applying for a new card adds a hard inquiry to your credit report, which can drop your score by a few points. Each account you open shortens your average account age and may drop your score.

6. Beware of fees

You can see all the fees charged by your credit card by reading your cardholder agreement -- fees usually get an entire page.

First-time credit card users may understand annual fees (how much you pay yearly to keep your account open) and interest fees. But your card issuer may charge other fees, too.

Late fees are extremely common. You'll pay them if you ever make a late payment.

One thing first-time credit card users may not realize is that certain types of transactions charge special fees. Credit card users typically pay fees for balance transfers. Cash advances ding card holders. Many cards charge for making purchases abroad.

7. Check your statements monthly

Each month, you'll receive a credit card bill. First-time credit card users may be tempted to simply eyeball the balance and chuck the card statement in the bin. Albeit satisfying, this isn't the smart move. Instead, consider taking a full minute to review charges.

Do you recognize every charge? If you spot weird charges, let your card issuer know. You may have been robbed by an identity thief posing as you.

Fraudulent charges on credit cards are not uncommon, so be on the lookout. Even a tiny unauthorized charge -- $0.02, say -- should be reported. The crook may be testing your card to see if it works before they scam you big time.

Reporting fraudulent purchases does two things. It helps the issuer stop the fraud and prevents you from paying for things you didn't buy. Legally, you're on the hook for up to $50 in unauthorized purchases. More likely, though, your issuer has a $0 fraud liability policy that means you won't pay for anything you didn't purchase.

8. Check your credit reports yearly

In the financial world, having good credit is important. Lenders of all types look at your credit reports when deciding whether to offer you credit cards, loans, and mortgages.

In the U.S., you get credit reports from three major credit bureaus: Equifax, Experian, and TransUnion. Your credit report contains details about your debts, your repayment history, and your current credit accounts -- including your credit cards.

Most first-time credit card users have limited credit history, so there won't be much to review. But check your credit reports at least once a year to ensure everything is correct.

You're entitled to a free copy of your credit report every year from each of the three main credit agencies -- visit to order yours. If you find anything that doesn't look right, head to the credit bureau's website or call them to file a dispute. Your score could go up.

Checking your credit reports won't hurt your credit scores. That's a myth that, unfortunately, makes its way to a lot of first-time credit card users.

9. Keep an eye on your credit scores for red flags

Small five to 10 point changes in your credit score are completely normal, especially for first-time users building credit. As your credit balances change, your score will, too.

Do you see a huge change in your credit score? Something big just happened on your credit reports, and it's worth noting.

If you sign up for a new credit card, take out a loan, or close an old account, a bigger credit score change is normal. But if you haven't made any dramatic changes to your finances and your credit score changes big-time, check your report.

These days, it's remarkably easy to keep an eye on your credit scores. The simplest way for first-time credit card users to track credit scores is via their issuer. Most credit card issuers now offer free score tracking, plus score alerts and monitoring on a single dashboard.

10. Ask your issuer for help

One mistake first-time credit card users make is not speaking up when they're in trouble. Credit card contracts are full of terms and conditions and fine print, but they can be more flexible than they appear. If you know you can't pay your credit card bill, call your issuer and ask for help.

It's in everyone's best interest -- yours and the issuer's -- for you to repay your credit card debt. The best plan is to call your issuer before you fall behind. It may offer you an extension or a payment plan that skips late fees or excess interest. Work with your issuer to keep your credit score in good health.

Swipe smart, not hard

Learning the ins and outs of credit can be challenging for first-time credit card users, but it's hardly impossible. With a little bit of study, you can go from credit noob to credit card pro, well on your way to a life of good credit (and cheap loans).

Building credit is a long-term game. You won't have excellent credit overnight; it can take years to build up a credit history worthy of a high credit score. But that effort pays off when you enjoy quick approvals and low interest rates on cards, mortgages, and common loans.

Still have questions?

Here are some other questions we've answered:

Choosing a credit card

Don't you wish you could take a peek inside a credit card expert's wallet sometimes? Just to see the cards they carry? Well, you can't look in anybody's wallet, but you can check out our experts' favorite credit cards. Get started here:

Outside Experts Weigh In

D'Arcy Becker

D'Arcy Becker

Department Chairperson and Professor of Accounting at the University of Wisconsin-Whitewater

What advice would you give first time credit card users?

Be careful about the kinds of things [they] charge. It is usually a bad idea to put all of your expenses on a [credit] card. That can lead to a false sense of how much cash you have (because you’re not spending cash during the month but owe a lot at the end). It can also make expenses seem less real. You don’t feel the pain of the expense, so it is easier to buy things you can’t afford.

What is a common misconception about credit cards?

That you can afford to have a credit card if a company will give you one. You can get a credit card with high interest terms because this is profitable for the card company.

How can shoppers feel they choose the right card for their needs?

The cost of a card comes in three forms: the annual fee to just have the card, the fees and penalties for missed or late payments, and the interest charges. If you look at one of these features and not the others, you might not get the best deal. Don’t kid yourself that you’d never pay interest, late fees, or penalties. Mistakes happen. Some cards have forgiveness for a single late payment. Some have no annual fee. Some charge low interest. Try to find cards that have all three.


  • Credit limits for new users typically range from $500 to $1,000. Limits go up as your credit history improves. Your issuer determines your credit limit on a per-card basis.

  • You will be charged interest for only making minimum required payments. First-time users should pay monthly credit card bills 100% to avoid interest fees.