7 tips before you get your first credit card

Anyone 18 or older is eligible to open a credit card in their own name, but a lot of us started out clueless about how to manage our cards.

From interest rates and APR to credit limits and closing an account, there's a lot to learn.

CNBC Select is here with seven tips for anyone new to the world of credit cards

Credit cards companies issue applicants a line of credit they can tap to make purchases. If you're young or don't have a robust credit history for a bank to review, you may only qualify for a secured card.  

With a secured card, you provide a security deposit that doubles as your credit limit. That way, if you default on your bill, the card company has cash to cover the loss.

You'll typically start out with a $200 credit limit, which can increase to a specific limit to help you get a handle on revolving loans. Though they're limited, secure cards are a great way to establish credit and can help raise your credit score.

The Capital One Platinum Secured Credit Card is one of the best on the market. With a security deposit as low as $49, you'll still get access to at least $200 in credit and be considered for a limit increase in just six months.

Credit card issuers are required by law to disclose interest rates, annual fees, foreign transaction charges and any other fees or penalties. Before you decide the card you want, learn the ins and outs of any card that catches your interest.

There are several great credit cards with no annual fee. Their rewards may be limited but they're a great starting point for building your credit card skills.

Keep in mind, though, that every time you apply for a card, the lender runs a hard inquiry on your credit report. These can ding your credit score by a few points, so only apply for cards you truly want.

If you're still in school, there are cards for college students with more modest credit limits.

The Bank of America® Travel Rewards for Students card earns an unlimited 1.5 points for every $1 spent on purchases. Points can be redeemed for statement credits to cover travel expenses like flights, hotels or even baggage fees.

You may have felt intimidated by credit cards' high interest rates, also known as APRs. But, as long as you pay bills on time and in full every month, you won't ever have to pay them.

This is because many credit cards offer a grace period, which is the period of time between the end of a billing cycle and when your bill is due. During a grace period, you may not be charged interest on your balance — as long as you pay it off by the due date.

Grace periods vary by card issuer, but must be a minimum of 21 days from the end of a billing cycle. For example, if your billing cycle ends on the first of each month and your bill is due on the 22nd of the month, your grace period is 21 days. If you happen to carry a portion of your balance over to the next month, interest will begin accruing.

Enrolling in autopay is an easy way to make sure you never miss a credit card payment, but we know that sometimes mistakes happen. While you still may get a penalty APR, you can consider a credit card that has no late payment fees ever, like the Citi Simplicity® Card.

Spending below your credit limit is essential for a good credit score. The rule of thumb is to not spend more than 30% of your credit limit, although some experts say 10% credit utilization rate is better.

Your utilization rate is a ratio that measures how much credit you are using compared to how much you have available. For example, if your current balance is $2,000 and you have a $10,000 limit, your credit utilization rate is 20%.

As your credit card usage goes up over time and you try to maintain a low utilization rate, consider asking for a credit limit increase. As long as you don't keep spending more, your ratio should shrink.

You can also pay down your bill multiple times a month to keep your balance low.

It's important to report unauthorized charges as soon as you can. Most issuers offer 24-hour fraud protection and identity theft assistance to help deal with fraudulent charges.

According to federal law, cardholders can only be held liable for $50 of a fraudulent charge.

Make a habit of reviewing your credit card bill each month, if not more often. Seeing your spending habits may motivate you to budget, too. 

Keeping zero balance on your credit card isn't the flex you think it is. Lenders and credit card issuers want to see how you use credit, so it's important to make purchases and then pay them off in full.

Keeping your card active will also prevent your issuer from closing it.

While you want to keep your credit utilization lower than 30%, you also want to be sure you are using your card to its fullest benefit.

Your first credit card will have a big impact on your credit history. And as long as you use it responsibly, that impact can be very positive. Credit cards not only let you afford the basics, like everyday expenses, but they can earn you rewards when you charge and help you qualify for lower interest rates on loans.

Canceling your credit card can be harmful to your credit score, especially if it's your oldest card. It will bring down the average age of your account, but perhaps more importantly it will decrease your overall credit limit, which is one of the most important factors in calculating your credit score. 

While there are scenarios where it may make sense to close a credit card, such as if you're paying an annual fee on a card you no longer use, see how canceling it will impact your credit score.

CreditWise® from Capital One has a free score simulator that shows how such actions will change your score, and it's available to anyone, whether they're Capital One members or not.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every credit card article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of credit card products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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