First Time Credit Users

Read your credit card agreement.
In reality, not many credit card applicants take the time to read their credit cards’ Terms and Conditions in full. As a first time credit card applicant, make it a habit to read the fine print before signing up for anything. Why is it crucial to read the fine print? Because the true costs of your credit card are disclosed here. What you see in the ads are only the best features of the credit card, the actual conditions are explained in the Agreement and it is up to you to find out.

Set your monthly budget.
As a student, practice effective budgeting or money management starting now. This will greatly help you in handling your finances in the future. Set a definite amount for you to spend each month and make sure that you have enough to set aside for your debts, credit card payments and for your savings. Every month you should be putting something away in savings. If you can’t put something away in savings each month then you are living outside of your means and you need to take a hard look at your spending habits.

Pay off your credit card balance in full each month.
Make it a point to pay back your monthly credit card balance in full to avoid paying the interest. There are some credit building companies that say its good to leave a running balance on your credit card because it will encourage the credit companies to increase your credit limit. I don’t know how true that is. I’ve had cards that I have paid off each month that have given me regular credit line increases. What matters most in building your credit history is how you use your available credit and how timely you are in submitting your payments.

Stay within your credit limit.
Staying within your credit limit means more than just not going beyond your allotted credit. Financial advisers recommend not using more than 30% of your available credit if you want to keep your credit history in excellent standing. This habit will not only protect your credit history, it will also protect you from the risk of incurring more debts than you can afford.

Check your credit card statements regularly.
It is your obligation as a credit card holder to check the accuracy of your account statements. If you find errors or unauthorized charges in your account, call your credit card issuer immediately. If your credit card company provides online access to your account, take advantage of this feature by checking your account on a daily basis. Doing so will also alert you about your due dates of payment.

Use your credit card with caution.
Credit cards are meant to be financial tools when you need them. Nevertheless, credit cards are not supposed to be used without careful consideration. Before charging a purchase to your credit card, ask yourself, do you really need to make this purchase? Can you pay back your balance by the end of the month? Is it a necessity or just a want? How will this purchase effect my monthly budget?

Credit Card Balance Transfer

If you're like most folks, chances are you get several credit card balance transfer offers a week. Oftentimes these come from credit cards you already hold, offering you significantly reduced interest rates (often at 0%!!) if you transfer a balance from another card. And, if you're like most folks in these scary financial times, you're looking at your expenses through a magnifying glass and becoming more acquainted with your credit card interest rates than you ever wanted.

All this is good. You should have a good general knowledge at any point in time of the interest you're currently paying. And you should examine the offers you receive, simply because sooner or later you'll probably receive one which makes good sense.

If you read no further, please read this: A credit card balance transfer works best in your favor if the transfer is made to a new card or a card you hold with no current balance. Why? Because the balance you transfer gets paid off first. Here's an example:

Let's say you hold Credit Card A with a $3,500 balance at 15% interest and Credit Card B with a $1,000 balance at 18% interest. You receive an offer from the Credit Card A for a balance transfer at 0%. Sounds like you should transfer Card B's $1,000 (currently costing you 18%) to Card A, right?

What you need to keep in mind: Once you make the balance transfer, any monthly payments you make to Credit Card A will first be applied toward your balance transfer amount. This means that the $1,000 you transferred will be paid off sooner, and the $3,500 balance you started out with will languish, costing you 15% without being paid off at all, for however long it takes you to pay off the $1,000 you transferred. Your balance transfer just increased the amount of time it'll take you to pay off the initial balance you carried.

Of course there are other factors to consider: Whether you pay greater than your minimum amount due each month, whether the amount saved in interest by a transfer exceeds the amount of additional interest you may pay with an existing balance, etc. Credit card balance transfers can be a very, very good thing if done wisely. Just remember two things:

Remember to do your basic math: Make sure you come out in a better financial position because of your actions;

Remember that credit card companies are in the business of making money. They're not your mama or your daddy and they're not in the business of doing you a favor; it's not their job to look after your financial well-being. The one best suited to do that is the one whom it most affects, and that one is you.

Source: Associated Content