7 Things You Need to Know before You Get Your First Credit Card ...

Before you get your first credit card, there are several things to consider. Of course, you have probably already considered how convenient having a credit card will be. You can use a credit card to purchase items at any store. Credit cards are often needed to make online purchases. I don’t know what I would do without my credit card when I want to buy something online. Convenience aside, credit cards are also really important to have for emergencies. The first time my car broke down I was so happy I had a credit card to pay the tow truck. Obviously, credit cards are very useful, but before you get your first credit card you need to know the following things.

1. Shopping for a Credit Card

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Before you get your first credit card, you need to go shopping for a credit card. You may get credit card offers in the mail and be tempted to apply for the first offer you receive. However, there is no need to limit yourself. Not only can you shop for credit cards at websites like credit.com, but you can even apply for a credit card at your bank or credit union. Sometimes, applying for a credit card at one of these places is actually better. This is because as a first time credit card owner you won’t have very much credit, and your bank or credit union may be more forgiving of this. As you are looking for a credit card, whether it is online, at a bank, or at a credit union, you will need to do some comparison shopping.

2. Comparing Credit Cards

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There are so many credit cards to choose from. In the process of looking for a credit card, you may find yourself wondering how to know if a credit card is good or not. There are several factors that you will want to consider when trying to decide which credit card is right for you. First, you should find out if there is an annual fee. Some credit cards make you pay a yearly fee to be able to use them. Personally, I stay away from these credit cards because an annual fee is not in my budget. You also want to consider what the annual percentage rate is. This is the interest rate you will be paying on your purchases, and you want it to be as low as possible. Also, you should consider the introductory rate. Some companies offer a zero interest rate for the first six months. Finally, you should find out what the late payment policy is. Some credit card companies increase your interest rate if you miss just one payment, which you should never do.

3. Good Payment History

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One of the most important things you should know about having a credit card is the importance of establishing a good payment history. You should always pay at least the minimum balance on time every month. Ideally, you will be paying off the credit card every month to avoid accruing interest. When you do pay your credit card on time every month, you will be establishing good credit. You need good credit to be able to apply for loans, buy a house, and even rent an apartment. Having a credit card and making the payments on time is one of the best ways to build good credit.

4. Know Your Credit

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Speaking of credit, you should also know your credit score. It is important to know what your credit score is so you know if you need to take steps to improve it. It is likely that your credit score won’t be very good at first. This is not actually a reflection that you did anything wrong. Rather, you are simply too young to have built credit. An excellent credit score is considered to be 720 and above, a good credit score is 680 to 719, average is 620 to 679. Anything below these numbers is not very good. However, don’t worry if you have a low number. Like I said it is probably due to youth. To find out your credit score you can get a free report at credit.com.

5. Loyalty

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When you are looking for a credit card, you want to choose a credit card that you wouldn’t mind having for a long time. Loyalty is important for credit history. Staying with a credit card company for a long time will really benefit your credit history. Also, if you are a loyal customer you can often negotiate a higher balance. Sometimes the first credit card you get will have a very low balance, but over time you may be able to negotiate a higher maximum balance. One reason to do this is to make sure you could use credit card for a major emergency. If your maximum balance is $1000, you may not have enough to cover an expensive emergency, and being loyal can help you be able to raise this balance.

6. Use It

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Once you get your credit card you should use it every month, even if it is only a small purchase. Not only will this help you build credit, but it will also keep your credit card active. The first credit card I had I considered to be for emergencies only. Needless to say, I did not use very often. As a result, my credit card stopped being active. Also, I did not build any credit. Now, I make sure to use my credit card every month and pay the full balance on time.

7. Consider Being Added to Parents' Credit Card

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If you feel you are not quite ready for your own credit card but need the use of one, consider asking your parents if you could be added to their credit card. While this will not build your credit history it could provide you with any easy transition into having a credit card. Naturally, you don’t want to use the credit card for a bunch of frivolous purchases. You and your parents could come to an understanding of what the card should be used for. Also, you should consider paying them for your balance at the end of each month. This way, you really get a feeling of what it is like to have a credit card.

Credit cards are very convenient, but they come with responsibility. When you are looking into getting your first credit card, you need to be fully informed. Hopefully, this article gave you some insight into owning a credit card. Are you thinking about getting a credit card for the first time?

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