As America's next batch of college seniors prepares to graduate, millions of graduates will be applying for credit cards.
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Here are some tips to avoid making mistakes when obtaining your first credit card.
1. Engage in Credit Card Education
Now with apps and smartphones, credit card holders have a wealth of access to financial information. With mobile banking, users can see what they're spending on in real time. Especially for millennials who have grown up with a unique blend of fintech, Troy Dennis, Head of Credit Card Product Management and Acquisition for TD Bank (NYSE:TD), says millennials have so many tools availalbe to teach them how to manage credit responsibly.
2. Keep Your Utilization Rate at 30% or Below
So you've gotten your first credit card, but that doesn't mean that you can spend the entire credit line. The utlization rate is how much a credit card holder spends in comparison to the card's credit line. Dennis suggests that millennials with their first credit card maintain a utlization rate at 30% or lower.
Spending up to one's credit limit can show that a card isn't being used responsibly.
3. Don't Fear the Credit Card
Millennials grew up during the great recession, and as a result are cautious of credit cards. But one of the worst things Milennials can do is not sign up for a credit card. Building credit allows Millennials down the line to buy a house or an automobile, or rent an apartment.
Dennis says that lenders are looking for a sense of responsibility that a borrower can manage a bill and make payments, all of which can be demonstrated by establishing a line of credit.