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# 5 Things You Need to Know When Getting Your First Credit Card
April 15 2021
Written by Morgan Wilson.
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**GET ORGANIZED**--Credit cards are convenient payment tools that allow cardholders to purchase without cash while enjoying numerous rewards and benefits.
[Findings from Statista](https://www.statista.com/statistics/245385/number-of-credit-cards-by-credit-card-type-in-the-united-states/) show how popular they are across the country, with Visa issuing more than 300 million credit cards in 2019 alone. However, one should also be aware of the risks that come with owning a credit card, as [cardholders in America have an average debt](https://www.cnbc.com/select/average-credit-card-balance-by-state/) of around $6,194. And if you’re considering getting your first credit card, then here are the 5 things you need to know.
1. **It’s Different From a Debit Card**
The main difference between the two is that debit cards pull the money straight from your bank account, thereby deducting it from your balance in real-time. Credit cards charge any purchase you make to the bank’s credit line, which you pay back later on via monthly payments. Take note that credit cards will affect your credit score depending on your usage and how diligently you pay for your outstanding balance.
2. **Credit Cards Are Not Free Money**
Financially challenging times might make it tempting to rely on credit cards to cover expenses easily, but this may not always be the best decision. [Our article on struggling L.A. tenants](https://www.citywatchla.com/index.php/cw/los-angeles/20371-1-in-5-tenants-in-la-has-struggled-to-pay-rent-during-pandemic) discussed renters that had difficulty with non-payment, especially with a third of households relying on credit card debt and emergency payday loans. This example is just one of many that illustrate how credit cards that are treated as substitutes for money can lead to unfavorable consequences. So, make it a habit to pay your bill in full, which can save you plenty in terms of interest in the long run, especially when times are tough.
3. **Carrying a Balance Means You’re Losing Money**
While enjoying purchases now and paying for them later on might seem like a good deal, bear in mind that you’ll be facing interest on every cent that doesn’t get paid on time. Not only will you still have the original debt hanging over your head, but there’s now an extra charge to accompany it. Staying well within the card’s limit and your budget will help you avoid losing more money than you can afford.
**4. There Are Several Types of Credit Card Fees**
Because credit cards offer the user several privileges, most companies will charge fees for the benefits and perks of having them. A guide to [credit card fees by Petal](https://www.petalcard.com/blog/common-credit-card-fees-how-to-avoid-them) points out that there are over a dozen types of fees cardholders encounter. These fees fall into four categories: basic account fees, usage fees, penalty fees, and customer service fees.
Basic account fees are related to your application and account, while usage fees apply to your card usage, such as foreign currency transactions and cash advances. Meanwhile, users might get slapped with penalty fees for late payments, and customer service fees include a paper statement fee and replacement card fees. Fortunately, many of these fees are avoidable. For instance, you can easily avoid penalty fees by making sure your payments are on time, and planning out your transactions will also reduce your usage fees. Be aware of what fees your card charges so that you can avoid having to pay extra.
**5. You Can Take Advantage of Your Credit Card’s Rewards**
Credit card companies offer different kinds of rewards. The key is to get a card that will match how you spend. Remember that rewards are only valuable on a credit card as far as they are useful to you, so do try to apply for those with direct cashback or direct discounts at retailers you frequent. [An overview of credit card rewards by Forbes](https://www.forbes.com/advisor/credit-cards/best/rewards/) can help you make the most of what they have to offer for your lifestyle and needs.
When used properly, credit cards can be a powerful tool to make your life easier. However, be aware of how easily one can accumulate debt, which can linger for months if not years with mounting interest rates. With great power comes great responsibility, and knowing these 5 things can help you wield your credit card well!
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