A credit card allows you to borrow money for purchases. The bank gives you a credit limit, which is the maximum amount the lender will allow you to spend on your card. If you pay your balance in full each month, there’s often no cost to you for using the card. If you carry a balance from month to month, you’ll pay interest. The interest rate, expressed as APR or annual percentage rate, depends on your credit history and the type of card.

Just one missed or late payment can have costly consequences. It can lead to late fees, interest charges and, in some cases, a higher APR. Beyond that, late payments have the potential to ding your credit score, which can hurt your ability to get loans at favorable rates in the future. You may be able to set up automatic payments through your bank’s online site or mobile app to make sure you pay on time.

It’s a good idea to keep track of your credit card purchases. Most banks offer online banking and mobile apps with features to help you manage your credit card. You can get real-time access to your transactions instead of having to wait for a monthly paper statement. You can also set up alerts to notify you of suspicious charges, when you’re approaching your credit limit and to pay your bill on time. And, if you lose your card or see a questionable transaction, you can quickly report it.

It's important to learn how to protect yourself from fraud and what to do if you become a victim. Keep these tips in mind:

Now that you’re actively building credit via your first credit card, it’s important to get into the habit of monitoring it. Three major credit bureaus keep track of your credit history: Equifax, Experian and TransUnion. You’re entitled to a free report from each of them once a year. Checking your credit report on a regular basis can help you catch mistakes that could be hurting your credit score. Common errors to look for include debts listed more than once or incorrect account balances or credit limits. If you find an error, the Consumer Financial Protection Bureau offers tips and sample letters for disputing it.

Your credit score is based on information in your credit report and is used as a measure of how reliable you are about paying back money. Generally, better credit health can help you further down the road when you’re looking to tackle larger purchases that might involve loans or different credit cards. Many banks provide credit scores for free through online banking and mobile apps. If you’re looking to rebuild your credit or are establishing credit for the first time, consider starting with a secured credit card to build your credit history.