183 million Americans have a credit card.

And you’re about to join their ranks.

You may be wondering a few things about getting your first credit card. In this article, we’ll go over some of the things you need to know in order to ensure you use your card responsibly.

Almost anyone over the age of 18 can qualify for a credit card, but there are a few things you should prepare for so that you don’t end up in debt.

Read on for some of our top tips and tricks.

1. A Credit Card Helps You Later in Life

A credit card will help you later on in life. In order to make big purchases in the future, like a car or home, you’ll need credit. To give yourself a good credit score, you need to build the credit.

This means you’ll need to use the credit card regularly. But you also need to use it responsibly.

2. Credit Cards Can Give You Rewards

Credit cards are a great way to earn rewards toward things you love. For example, many airlines tie their loyalty programs into a credit card. Spending money on the credit card gives you things like airline miles.

Depending on the airline you’ve chosen, you can cash them in for flights and hotels. Some credit cards also have marketplaces that allow you to cash in points toward something not related to travel.

3. Getting Your First Credit Card: Know How Interest Works

Your first credit card will likely have a high-interest rating. This is because you don’t have much credit history. Without a credit history, you’re considered a “high risk,” so they’ll lend you money with tough stipulations.

APR stands for annual periodic interest rate. It helps you calculate how much interest you’ll pay on your purchases each month.

Say you have a really high-interest rate credit card and its APR is 25%. You’ll divide this by 365, or the number of days in a year. You get 0.068%.

Multiply this by your credit card debt. If you owe $500 on your card, this means you’ll pay $34.25 per month in interest.

Paying interest is something you’ll want to avoid, so try not to buy things you can’t afford.

4. Pay Off Your Balance in Full Every Month

See a new pair of shoes you can’t resist but can’t afford? Don’t whip out the credit card to pay for them. This is how you get into trouble. You’ll have tons of credit card debt you have to pay off each month, making your purchases cost a lot more than they did originally.

You should always pay back your balance each month. This is so that you avoid having to pay interest. You get a small grace period for each purchase you buy wherein it is interest-free. Pay off a good chunk of your credit card debt, or the entire thing, and you won’t have to pay interest on items.

5. Learn How Credit Cards Affect Your Credit Score

FICO’s model of a credit score is the most common one lenders use. It takes a variety of things into account when creating your credit score.

The most important factor is your payment history, which determines 35% of your credit score. If you pay on time every month, and in full, you’ll have a shining score in this department. However, paying off more than you owe is always a great idea.

The second most important factor is your credit utilization. This is the amount of your credit limit you’re using. This should be kept under 30% of your credit limit. Credit utilization counts for 30% of your FICO score.

The length of your credit history counts for 15%, which is why many young people struggle to take out loans or get credit cards. The longer your credit history, the more institutions are willing to give you loans or a credit card.

The types of credit you have clocks in at 10% of FICO’s factors when they create your credit score. A diverse portfolio of credit, such as car loans, home loans, and student loans, are optimal for your FICO score.

Lastly, whether or not you’ve taken out any new credit recently counts for 10%. When you apply for a new credit card or loan, your credit score dips a little bit. However, you shouldn’t let that stop you from applying for a card. Just don’t apply for several at a time.

6. Think About a Secured Credit Card

A secured credit card is a great way to build credit without the temptation of going into debt. It’s kind of like a prepaid debit card but allows you to start to create a credit history.

If you put down $1,000 on your secured credit card, you’ll instantly have a credit limit of $1,000. There’s nothing to pay back each month, as you’ve paid the money directly. Instead, you’ll just accrue credit history.

Be Cautious But Optimistic With Your First Credit Card

Getting your first credit card can be intimidating, but it is one of the first big steps you’ll take as an adult. Make sure you don’t acquire too much debt, as this will follow you for the rest of your life.

Instead, spend wisely and don’t go overboard. You’ll want to use your card as a tool for your future, not something you’ll be chained to for the next several years.

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