Guidelines for First Time Credit Card Users

A "first" credit card can be exciting, tempting and intimidating. Share these tips with your kids, so they are better prepared.

1. A credit card is serious business. The issuing company is lending you money and you have responsibilities.

2. One card is probably enough. Avoid the temptation by only having one card.

3. Keep the credit limit low. $500 or $1000 is high enough for most first-time credit card users.

4. Pay off the entire balance each month. Avoid interest charges and build a good credit record.

5. Make the payments on time. This helps build a good record and avoids late payment charges.

6. Use the card for emergencies. Start off slowly with this new convenience.

7. Never let others use your card. You are responsible for all charges on your card.

8. Keep track of your use of the card and compare your records to what shows up on the monthly statement.

9. Keep the card active. Use for small purchases every 3 or 4 months. Then be sure to pay off the balance before any interest is due.

10. Avoid using the card for cash advances. The interest rate charged for advances is high and charged immediately.

11. Create a spending and budget plan. Do not let your credit card payments exceed 20% of your monthly income.

12. If having a credit card turns out to be a problem, get rid of it or stop using it for a while.

Here are some other things to keep in mind about your credit card.

• The credit card companies make money by charging interest on long-term balances. The rates they charge are relatively high.

• Choose a card that fits how you are going to use it. Probably for a first time user, find a card that has low (or no) annual fees and low interest rates. If you are not going to use it much, the benefits (airline miles or gifts) will not compensate for the fees usually found with these types of cards.

• Having a good credit record is important. Those with good records usually find that getting credit is easier and they often qualify for lower rates on their borrowing.

• Investigate the details of the card thoroughly. Be sure to understand all the fees and how interest charges are calculated.