The average American has over 2 credit cards. Given that the American population is well over 320 million people, it’s safe to say that there are a tremendous amount of credit cards currently in circulation.
Why do so many people love credit cards?
Put simply, credit cards enable people to make purchases regardless of whether or not they have the money needed to afford what they’re purchasing on hand.
If you’re thinking of getting your first credit card, the allure of being able to spend money free from the confines of your checking account balance may be exciting. Our advice though is to step back and take a deep breath.
While your first credit card can be helpful, it can also be harmful if used incorrectly.
Below is some guidance in regard to credit cards as well as tips on how to get your first one!
Are You Prepared for a Credit Card?
Just because you can legally get a credit card doesn’t mean you should. Managing a credit card requires that you only charge amounts to it you can pay in full that month or at least pay in full soon after your purchase to minimize interest obligations and other fees.
If you get a credit card and are delinquent on paying your balance, you’ll find what you owe can balloon exponentially. This can leave you in a place where you’re unable to afford to make even minimum payments and can lead you to bankruptcy, a lowered credit rating, and dangerous levels of depression.
Be sure to seek advice not only from articles like this one before getting a credit card but from trusted friends or family members to ensure that you’re well informed.
Know The Requirements
In addition to ensuring you’re emotionally ready to manage a credit card, you’ll also need to be legally ready.
The legal age to open a credit card account in the United States is 18. If you’re under 21, you’ll also need to have some sort of income in order for a creditor to approve your application. This requirement reduces the risk of predatory lending to young people.
If you’re 18 and don’t have any income, you’ll need a parent or guardian to sponsor or co-own your account.
Even If It’s Not Legally Required, Be Sure to Have Income
People who are over 21 may be excited to know that they don’t need verifiable income in order to legally get a credit card (though most reputable creditors will still require that you do). Even if you’ve found a creditor who is willing to lend you money without income, taking that offer is a recipe for disaster.
Every time you charge something to your credit card, you owe the credit card company that money back. If you pay your balance in full within the month, you won’t owe any additional fees on borrowed money.
If you don’t pay back your balance by the end of the month, interest will be applied to what you owe. For example, if you borrowed $100.00 at a 10% interest rate, you’d owe $110.00 if you didn’t pay any of what you borrowed back.
Where it gets even trickier is when you don’t pay your balance back for 2 months, 3 months or longer. Your 10% interest rate will apply over and over again to your $110.00 balance, $121.00 balance, $133.10 balance, etc.
Not having the means to pay off your credit cards means your balance will grow and become too much to handle.
Do not set yourself up for failure and be sure that you have the income to pay your debts prior to taking on a credit card.
Getting Your First Credit Card
Now that we’ve gone over some important prerequisites, it’s time to talk about finding your first credit card.
There are a few places you can look to apply for a card. These include a local bank (preferably the one where you already have a checking/savings account), your favorite retailer or grocer, or a trusted online source who specializes in helping people find good credit card offers.
When applying for your initial credit card, stay away from ones that offer a lot of perks. Those will require higher than average credit scores which, if you’ve never had credit before, will likely reject you.
There are specific cards targeted at college students or first-time credit users which may suit you. Keep an eye out for cards branded in that way.
Also, watch out for credit cards that charge annual fees or have very high interest rates. Always read the terms and conditions of the card you’re thinking of getting prior to filling out an application.
Denials Happen, Don’t Let Them Break You
Nobody likes rejection yet rejection is a persistent part of life. The same holds true with credit cards, especially if it’s your first one.
If you apply to a card and get rejected, don’t get discouraged. You likely applied for a card targeted at more established credit users. Simply lower your credit expectations and try again.
When in doubt, talk to a trusted relative or financial professional. They can steer you toward credit card products that will offer you higher chances of acceptance which will reduce the number of applications you fill out.
Applying for multiple cards may hurt your credit score. Because of that, you’ll want to try and limit your applications to only cards that offer you the highest chance of approval!
Wrapping Up Our Guide on Getting Your First Credit Card
Getting your first credit card can be an exciting process. It can also be a process filled with questions and pitfalls.
To help navigate your credit card search successfully, be sure to read and re-read our guidance above. Then, talk to a loved one or a local professional for additional information if needed.
Knowledge is power when applying for excellent credit cards and managing your financial health. So, get informed and when you’re ready, jump into a credit card that will be additive to your life and future.
If you’re looking for a reputable online resource that can help connect you with viable options for your first credit card, Bonsai Finance can help.