Know what you’re signing up for.
Every credit card company and bank has different terms and policies for their cardholders. Some prefer that you pay bills online, while others require you to pay at the bank. Many of them come with annual fees, just for having the card. There are different rules about what age you must be to get a personal credit card, interest rates, your card’s spending limit, and other fine print. You want to be completely clear on those rules, how to make payments, your annual fee, when every payment is due (some cards charge late fees!), how to read your statement—the full terms and conditions.

For example: Zero percent interest (or APR) sounds good in theory, but not if the card’s interest rate is sky-high after the interest-free period is over and you’re still carrying a balance (money owed). However, if you anticipate being unable to pay off your entire monthly balance every month for a few months, a credit card with zero percent APR might be ideal—as long as you pay it all off before the end of the no interest period.

Whew! See, there are lots of factors to consider in relation to your own needs. If all the options and fine print feel overwhelming (very likely!), ask a trusted adult for guidance.

Pay the full balance every month—not just the minimum payment.
There’s a thing called the “Minimum Payment” on your credit card bill. I used to pay that and think, Great, I’m done for the month!, but that’s not the case! Why? Because of that interest we were just talking about. Paying only the minimum payment—a small percentage of the total balance on a monthly bill—means you’ll be charged interest on the remaining amount you didn’t pay. That means that the next month, you’ll have to pay the remaining amount you weren’t able to pay, plus the interest you were charged on it, plus any additional charges. Say at the end of February you had a bill for $10, but only paid back $9. If your credit card’s APR is 15 percent, that means that at the end of March, you’ll have to pay $1.15—that dollar you owed, plus 15 percent. Credit card interest rates vary from company to company, but they’re all high—you don’t want to be paying more than you’re spending. It seems OK when the bill is 10 bucks, but consider if that 15 percent had been charged on $100, $1000, or $10,000. Then interest charges can wreak total havoc on your financial situation.

Another word of caution: If you don’t pay your interest off, then the next month you’ll be charged interest again—on the balance that includes the interest you incurred the month before! It can quickly turn into an endless, vicious cycle if you don’t keep it under control. Credit card debt is easy to get and extremely difficult to stamp out. If you can, avoid it entirely. If you can’t avoid it, come up with a plan to pay off as much of your balance as possible each month. One way to ensure you pay off your entire balance each month, if you’re able to do so, is to set up automatic payments online. Most credit card companies offer that option, and it helps to ensure that you don’t forget one month, incurring late fees, more interest, etc. If your credit card company doesn’t offer automatic payments, you can set a regular alert in your phone’s calendar as a reminder.

Know how credit scores work.
Carrying a balance on your credit card also affects your credit score, which is a rating lenders use to guess how reliable you are as a borrower. Student loan officers, for example, look at credit scores when they consider loan applications. Landlords do, too, when they evaluate apartment applications. The higher your credit score, the better. (In the U.S., the Federal Trade Commission helps consumers get a free credit report each year, and you can get yours here.)

Maxing out or having a high balance on your credit card gives you a high debt-to-credit ratio, which is the amount of money you owe versus the amount of credit you have available to use. A high debt-to-credit ratio typically leads to lower credit scores. Keeping a low or zero credit card balance helps you maintain a high credit score. Paying your credit card bill on time is also important to maintaining a good score, so be sure to always pay your bill on or before the due date.

Don’t spend more money with your credit card than you have in cash.
This is all pretty straightforward in theory, but the danger of credit cards is that they allow you to possibly spend more money than you actually have. It’s so, so important to keep track of how much you’re spending on a credit card, and to make sure that you have enough cash to pay that amount back each month. Apps like Mint make it easy to create a budget for every stupid thing we have to spend money on, and it lets you know when you’ve gone over.

In conclusion, I am going to sound like a broken record once again: Try as hard as you can not to spend more on your credit card than you have in spendable cash, and always, always keep track of how much you’ve spent on your credit card over the course of the month. I keep repeating this because it’s so incredibly crucial. If you take nothing else from this article, remember this piece of advice. But you should take the rest of it, too! Managing finances can be hard and scary, but the more you know, the less intimidated you’ll be. And the less random iTunes debt you’ll have, too. ♦