Credit cards can be a powerful financial tool when used responsibly. However, for beginners, understanding how credit cards work and the best practices for using them can be overwhelming. In this post, we will break down the basics of credit cards to help you navigate this essential aspect of personal finance.

Firstly, it is important to understand that a credit card is a type of revolving credit. This means that you can borrow money up to a certain limit to make purchases and then pay it back over time. The credit card issuer will charge you interest on any balance that you carry over from month to month, so it is crucial to pay off your balance in full to avoid accumulating debt.

When you are approved for a credit card, you will be assigned a credit limit, which is the maximum amount you can borrow. It is important to stay well below your credit limit and only spend what you can afford to pay back. Making at least the minimum payment on time each month will help you build a positive credit history, which is essential for future financial endeavors such as getting a loan or mortgage.

Many credit cards offer rewards such as cash back, travel points, or discounts on purchases. While these rewards can be enticing, it is important to choose a credit card that aligns with your spending habits and financial goals. Additionally, be sure to read the fine print to understand any fees, interest rates, or terms and conditions associated with the card.

Beginner Friendly Credit Cards:

Finding the right credit card can be a daunting task, so here are some suggestions on beginner friendly options to start building your credit:

Discover it® Student Cash Back Discover it® Student Cash Back Card

• 5% Cashback on everyday purchases up to the quarterly Maximum + an additional 1% cash back on all other purchases

• Unlimited cashback match at the end of the first year (Double your money!)

• No annual fees!

Chime Credit Builder Secured Visa® Credit Card Secured Credit Building Credit Cards | Chime

• No annual fees

• Similar to a debit card, but made to build credit

• Feature to automatically pay your monthly balance on time

OpenSky Launch Visa® OpenSky (openskycc.com)

• Open an account with as little as $100

• No credit checks necessary

• Limit increases and upgrades available after 6 months
  

Remember, using a credit card responsibly can help you establish good credit and improve your financial standing. By making on-time payments, keeping your credit card balances low, and avoiding overspending, you can build a solid foundation for your financial future. In conclusion, credit cards are a valuable financial tool and should be utilized. By understanding how credit cards work and using them responsibly, you can take control of your finances and work towards achieving your financial goals.

Remember, financial literacy is key to financial success, so continue to educate yourself and make informed decisions about your money.