What to know before getting your first credit card

(NC) It can be exciting to get a credit card for the first time. It provides the opportunity to build credit—something that most young adults don’t have. As a new credit card holder, here are some things to remember so that you make your credit card work for you:

Credit can be costly. If you can’t pay back the full amount you spent each month, it’s a warning sign that you may be spending more than you can afford. Avoid paying interest by paying off the entire balance of a credit card every month. Interest charges can add up quickly, and you may get into debt and hurt your credit score. Bad credit can follow you for years to come.

Take advantage of online resources, like the Financial Consumer Agency of Canada’s credit card payment calculator, which lets you see how long it would take to pay off a credit card if you don’t pay the full amount each month. This can help you understand exactly how interest works.

Build credit using a secured credit card. If you’re uncertain about getting a traditional credit card, consider starting with a secured credit card. To get one, you’ll have to give your bank a security deposit to cover the credit limit. If you don't make your payments, the bank can use your deposit to pay the money you owe.

These types of cards can help young adults build a good credit history without the risk of defaulting.

Know your rights. Banks have to follow certain rules regarding your credit card agreement. For example, they must clearly set out the key features of the credit card in an information box. This includes information like the interest rates, annual fees and other charges.

Your bank may make changes to the features or the terms and conditions of your credit card. If so, they must provide you with the details in writing at least 30 days before the changes take effect.

By understanding how your credit card works, using it responsibly and knowing your rights, you can better manage your money and start building a credit history that will lay a solid foundation for your finances.

Find more information on credit cards, at canada.ca/money.