Final answer:
To maintain good credit, make payments on time and use less than 30% of your credit limit. Pay more than the minimum to avoid high interest charges on balances carried over month to month. Consider the higher interest rates when choosing starter credit cards.
Step-by-step explanation:
To build and maintain a good credit score, it's essential to make payments on time and to manage your credit card usage effectively. Financial experts often recommend using only a small percentage of your credit limit, typically around 30% or less, to maintain a good credit utilization rate and to avoid deteriorating your credit score. Exceeding this percentage can be risky, as it may signal to creditors that you're overly reliant on your credit and may have difficulty paying it off.
It's also important to understand that if you carry a credit card balance from month to month, you will incur interest charges on the remaining amount. These charges can quickly accumulate, making it costlier to carry debt over time. Additionally, paying more than the minimum required payment each month can significantly reduce the time it takes to pay off the card balance and the total interest paid.
Finally, for individuals new to credit, it may be beneficial to apply for a credit card through your bank or explore options like department store or gas station cards. However, be aware that such cards often come with higher interest rates, making it more expensive if you carry a balance. Always strive to pay off your balance in full each month to avoid these additional costs.