What you should know about your first credit card

2020-07-28   minute read

Karen Johnson

Lifestyle Debt

Debt Solutions

Are you thinking of applying for your first credit card? Or perhaps, you now have your first credit card.  Here is what you need to know about your first credit card.

Person online shopping on their laptop holding a credit card

Credit Bureaus and Your Credit Score

It’s your first credit card so chances are you may not have much of a credit history. Using a credit card will create credit history. How you use your credit card and how you will make your payments will affect your credit score.

According to Equifax Canada, 35 percent of your credit score is directly related to your payment history.

Minimum Payments

The credit card company will tell you what your minimum payment is. Making the minimum as required will keep you in good standing with your credit card company. You must make the payment on time. Making a late payment or not making the minimum payment will negatively impact your credit score. This information remains on your credit history for a very long time.

Remember, carrying a balance on your credit card and only making the minimum payment on the credit card is just servicing, rather than paying down the debt.

Balance on Credit Card

The reason you have a credit card is to build a positive credit history and use it for convenience. The idea is to pay off the balance as soon as possible.

Use the credit card for regular monthly purchases such as putting fuel into your vehicle. Instead of using cash or debit, use the credit card and repay the amount of the purchase immediately from your bank account. This way, you are creating positive  credit history and not carrying a balance on your credit card.

According to Equifax Canada carrying a balance of 30 percent or more on your credit card will negatively impact your credit score.


Carrying a balance on your credit card will cost you more because the credit card company will charge you interest. Because it is your first credit card, chances are you have a higher interest rate than some of your peers with a more extensive credit history.

Annual fees  

It’s your first credit card and that might mean you have to pay an annual fee. You will see this as an immediate charge on your first credit card statement and every year thereafter.

Credit card use versus credit card debt

Using your credit card is great for convenience, booking tickets online, booking hotel rooms, and sometimes you getting great rewards like airmiles or cash back. Using a credit card responsibly will improve your chances of obtaining future credit such as mortgages and vehicle loans.

It’s never good to have credit card debt. It can negatively impact your credit score and cost you more money because of interest charges. Having credit card debt can prevent you from accessing credit in the future.

Avoid Pitfalls

A credit card may make it seem like you have more money than you actually do. It can lead to purchases you cannot afford or excessive spending. You will want to fight the urge to buy something you do not need just because you now have a credit card.

If you see something you want to buy or feel you need, think about it first. Is it just short term gratification? Will it be worth the headache of having to pay off the purchase?  Sleep on it and see how you feel the next day.

I have a credit card balance – what do I do?

If you want to pay off your credit card, you will have to pay more than the minimum payment. Create a budget that will allow you to pay down the balance. Contact the credit card company to see if you can decrease the interest for a short period to allow you to pay the balance down.

Life-Changing Debt Solutions

Credit card debt is overwhelming and can be notoriously difficult to recover from. If you’re struggling with your monthly payments and having trouble making ends meet, contact MNP for a Free Confidential Consultation today.

During this no-obligation initial meeting, a Licensed Insolvency Trustee will review your financial situation and identify options for you to eliminate your debt and begin rebuilding your credit. You may qualify for Bankruptcy or a Consumer Proposal, which would halt collections action and could help you become debt free in as little as nine months. Or, you may qualify for other solutions and opportunities to better manage your debt and work toward a financial fresh start.

No matter which solution is most appropriate for you, a Licensed Insolvency Trustee will provide the information and advice you need to make the best decision for your unique situation. Don’t wait. Call us today and take the first step to a better financial future.

Consultation icon