Credit cards are a great way to earn money or perks as you make purchases. For instance, if your credit card pays 1% cash back, spending $1000 means that you earn $10. The money earned is usually paid on a monthly or annual basis.

Credit card rewards come in different forms:

• A flat rate of cash back, regardless of where and how much you spend
• Different rates depending on where the money was spent. For instance, 1% on purchases in department stores, 2% on fuel purchase and 3% on supermarket purchases. 
• Tiered rate of cash back that is determined by the amount spent. For instance, 1% if you spend less than $4000 annually, 2% if you spend more
• No annual fee if a certain amount of money is spent
• Travel and Dining rewards are usually approved for those with good credit.

To make the most of your first credit card, here are some mistakes you need to avoid:

1. Not finding the best card for your needs

Before choosing a cash back card, take time to evaluate your lifestyle and spending habits. How much are you spending on expenses such as groceries, dining and travel? If you spend a significant amount of your money on eating out, go for a card that offers a generous bonus for dining. If you spend a lot on groceries, you need a card that rewards purchases at supermarkets. However, if you prefer having one card that can be used everywhere, then the best option would be a flat-rate cash back card.

2. Not taking advantage of shopping portals and rebate coupons

Everyone would love to enjoy a good bargain on their purchases. However, the savviest savers are those that know how to stack their perks with the best shopping portals, coupon codes and coupon apps. Stacking rewards means putting together multiple savings strategies so as to maximize rewards on a single purchase. Always be on the lookout for opportunities to stack your rewards and savings.       

3. Ignoring fees

Most credit cards with a perk require users to pay a monthly or annual fee. This could be anything from a few dollars per month up to $40 annually. Before signing on the dotted line, take time to research the fees charged by the different credit card companies. If you make purchases regularly outside your country, find out if the company charges foreign transaction fees. Make sure the fees charged don't cancel out your hard-earned rewards.

4. Getting mesmerized by sign-up bonuses

To entice customers, most cash back cards come with some sort of sign-up bonus. For example, you might be offered $200 if you spend at least $5,000 within the first three months. However, if you intend to use the card on a long-term basis, focus on the return rate offered for making purchases. Don't allow yourself to be blinded by an appealing bonus.

5. Ignoring spending caps

Some credit cards come with perk limits. When you hit this limit, you might still enjoy rewards, but at a much lower rate. Therefore, look for a card that has a high spending limit to maximize rewards for your spending.  (Note: Do not confuse this with a credit limit, and never live beyond your means.)  Alternatively, you could use multiple cards for different categories such as eating out, groceries and gas, or search for one that covers all types of purchases.

6. Using cards for auto-pay

One of the biggest mistakes you could ever make is putting your bills on autopilot. Quite often, bills come with erroneous charges which will mean paying more on your cards. If the bill exceeds your spending limit, the autopay could be denied and you might have to pay penalty fees. If you must put your cards on automatic, be sure to review your statements as often as possible. This will help you detect any problems as soon as they happen. If you do decide to go with autopay, create a monthly budget and track automated bills diligently.

7. Failing to monitor changes in terms

Some credit card companies are known to alter their terms at very short notice. Such changes could mean getting a lower percentage of cash back or fewer points. When this happens, you could consider switching to a more rewarding card. However, before closing the account, be sure to cash out all your rewards first.

Avoid these mistakes and you'll be on track to live blissfully with good credit.