Your First Credit Card

At the age of eighteen, you’re now legally adult enough to vote and to have a credit card. However, spending the money is generally a lot easier than paying the debt back. It’s not always easy, so make sure you apply only for one credit card as you don’t need several and it becomes difficult to manage more than one credit card at a time. It is also difficult to be approved for a credit card if you have no credit history.

Ways to improve your chances as being approved:

Student credit cards. Credit card companies often target college students, making it easier for them to be approved for a credit card. Be careful though as these companies will probably try to hound you to apply for more credit cards, making it that much more difficult to manage your finances.

Try the bank that you already bank with. It is very time-consuming applying for a credit card through a number of different banks. If you already have a saving or checking account with a specific bank, your existing relationship improves your chances of being approved of a credit card, as long as you’ve been a responsible client in the past.

A department store or gas credit card. Some companies like department stores and gas companies approve credit cards a lot easier than a typical bank, which can make applying for your first credit card a lot simpler. The problem with this is that these companies often have a very high interest rate, so if you’ve spent money that you don’t have via your credit card, you’re going to pay back much more than on a regular credit card.

A secured credit card. There is another option and this is the secured credit card. Here you will have to pay a deposit into the credit card equal to the limit amount. Then you can start using it as a credit card. If you can’t make your monthly payment, then the bank will take this deposit.

Some things to think about if you want to apply for your first credit card:

Do you have a permanent job with a fixed monthly salary? You’ll need this to be able to pay back the credit card if you use it, and it is a requirement from the credit card company’s side. Unless you’re a college student where your parents or guardian will be in charge of your credit card.

Do you think you’ll be able to not spend more than the limit? Will you be able to make the monthly payments on time? If you can’t make your payments on time each month your credit c\rating will drop and the interest you are charged will probably increase.

What is the main reason behind wanting a credit card? Some people use the credit card wisely; in a way they can improve their credit rating. If you want a loan from the bank to buy a house you need a good credit rating. Do you want to be able to spend randomly whenever you want, or do you want the convenience of having credit?

Various credit card terms you should know:

Annual Percentage Rate (APR)- This measures the yearly cost of credit. It takes into consideration the interest rate, service charges, loan fees, and so on. It would be a good idea to look at different credit cards and compare their APR to determine a good offer. The lower the APR, the lower the credit cost.

Annual Fees- A number of credit card companies charge a yearly fee whether you have spent on your credit card or not. Some companies don’t charge any yearly fees at all. If the credit card company does not charge a yearly fee, then the APR is generally higher. You should always check whether or not the credit card option you are choosing has a yearly fee or not and also what the APR is.

Grace Periods- Some credit card companies offer 21 – 30 days grace whereby you have that amount of time before you need to start paying back what you’ve spent. Some credit card companies however, don’t offer any amount of grace and you’ll have to start paying back what you’ve spent straight away until you’ve finished paying off the outstanding amount.

Other Fees- Make to sure to be aware of the smaller fees that you can be charged. For example, how much will the credit card company charge you if you make a late payment? How much will you be charged if you spend more than your limit on your credit card? Often it is the smaller costs that add up to what we cannot afford to pay.

Make sure you never exceed your credit limit and ensure that you can always pay back your debt.

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