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Getting your first credit card is a big decision. Whether you are looking for credit cards for students or an individual looking to establish credit, there are certain things you must do in order to keep in good standing with the credit card universe.
Stick with what you learn here and you'll be set.
Pre paid credit cards won't help you build your credit but they are useful for other cases.
First consider applying for a credit card with your bank if you have a checking or savings account with them. While you can apply online in most cases, do it in person. Your chances for approval will increase especially if your banker is looking to establish, or keep, a good relationship with you.
Department store and gas credit cards are an option as well. However, I strongly do not recommend them. They usually are accompanied with high interest rates, making carrying a balance a frequent problem.
Your purchasing options are also limited since you can only use these cards at the respective vendors. You can't buy food with your Nordstrom's card. They also entice you with discounts to get deeper into consumer debt.
Another option is applying for a secured credit card. You deposit money onto the card, which becomes your credit card limit. The bank holds onto your deposit in the event you do not make your payments.
Approvals for secured credit cards are more likely since your deposit acts as collateral. Many issuers will later convert your card to an unsecured credit card as long as you are in good standing.
Here are 7 key tips for your first credit card.
Be mindful of teaser rates. When the teaser rate is over, your card will convert to a "go-to" rate. Determine what that is.
My advice? Start off with charging just one thing (especially if you need budget help): i.e. gas, coffee, your cell phone bill. These charges are predictable. And, keeping your charges to a minimum can aid you in keeping below your credit limit.
Despite what you hear from Dave Ramsey and Suze Orman, credit cards aren't evil...people are. OK, that's a joke, but seriously. Credit cards are just plastic rectangles. Lack of financial education is what gets people into trouble.
Your first credit card shouldn't be your last. Once you are comfortable with using them, turn them into productive tools. There are many advantages of credit cards that can make them more good....than evil.
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