iQuanti: Getting your first credit card can be exciting. But it can also be a little intimidating, especially if you know people who have had trouble with credit in the past.  So, to help you start on the right track, here's everything you need to know about credit cards for beginners.

Why You Need a Credit Card in the First Place

While having a credit card can be a major convenience, there's a much more important reason why you should have one: to try and help build your credit history.

Your credit history is generally considered a record of all the payments you've ever made to creditors over time. The quantification of these transactions is what is sometimes referred to as a FICO Score - a metric that lenders might use to assess your creditworthiness.

In other words, getting and using a credit card now can help shape your ability to qualify for larger future purchases such as:

• A house
• A car
• Insurance products

Therefore, you should treat having a credit card as your opportunity to prove that you're financially responsible.

How a Credit Card Works

A credit card is essentially a short-term loan that a financial institution gives to its users for making purchases. The amount of this loan (called your credit limit) can depend on a variety of factors such as your:

• Income sources
• Debts
• Credit history

At the end of the billing cycle (about every 30 days), all purchases will most likely be collected onto a single bill and sent to the cardholder for payment.

The cardholder most often has two choices:

1. Pay off the balance in full
2. Pay the minimum monthly payment (or a higher amount) 

If the cardholder pays anything less than the total balance, they will "carry a balance." Balances are often charged at the variable daily interest rate that was stated when you applied for the credit card (usually listed as an APR or annual percentage rate). APRs are typically anywhere between 15 and 25 percent.

Every month that these balances carry forward can result in more interest charges. They will also likely get added to the existing balance, which in turn, will create even more interest. 

When left unchecked, this process can lead to severe credit card debt. Therefore, the best action a cardholder can take is to keep their spending low and pay off their balance in full every month.

What Happens if My Payments Are Late?

If a payment is late or below the minimum amount due, then the first thing that will happen is that you'll most likely be charged a late fee. This can be a penalty between $25 and $50 that gets added to your balance.

More importantly, the missed payment might result in a negative mark on your credit history. That can quickly drop your credit score and possibly inhibit your ability to apply for future credit cards or loans.

How to Apply for a Credit Card

Applying for a credit card can be as simple as going online to the card issuer's website and filling out an application. Before getting started, you'll want to have a few key pieces of information handy such as your:

• Social security number
• Gross monthly or annual income
• Recurring debts

If you're just starting out, good credit cards for beginners are usually any cards branded for "students" since they might be more relaxed about the eligibility requirements. 

If you do get accepted, remember to always use your credit card responsibly. How you manage your spending and payments now will create financial habits that you'll have for life, so start developing positive habits right from the beginning.