Tips for Opening a Credit Card
Opening a credit card can be an exciting thing! It opens your doors to purchasing things you love such as a new car or that fantastic holiday you’ve always dreamed of. But remember that it’s essential to be responsible when you’re dealing with credit cards. So before you open that card, brush up on these tips and info about credit cards beforehand:
What is Credit Score?
Your credit score is an overview of how reliable you look to the credit card companies (and the bank) when it comes to paying back your debt. Credit score is extremely important later in life when you want to apply for a bigger loan than just a credit card. What sort of loan might this be? Think about when you want to purchase your first house.. you’re going to need a mortgage. Another major loan you might take out in life is a car loan. Building up your credit score by using credit cards will help you out later. Just make sure you use them responsibly and pay them regularly. Not doing so will lower your credit score and make you less likely to score these kinds of loans later when you need them.
Learn About the Different Types of Cards and Features
While some credit cards are plain and simple, many offer different options like rewards for frequent buyers or student cards meant for young adults in college. You can earn reward miles on credit cards that are associated with an airline. Just think about what you will use your card for, and don’t go for one that has extras you don’t need.
Also, it’s important to understand the different credit card features like interest rate, annual fee and credit limit before you apply. An interest rate is the amount charged on top of your balance. It’s what you pay the credit card company for loaning you the money. You will pay back this interest rate along with the balance when you pay your bill. But if you make a late payment, you will be charged a late fee along with the interest. These late fees are horrible, and can end up costing far more than whatever you bought with the credit card. So if you open a card, make it a number one priority to pay that card on time every month.
Don’t be discouraged if you aren’t accepted the first time you apply for a credit card. Credit card companies aren’t always willing to give a credit card to a first-time card holder. So be aware of the best companies to go for for a first-time card. If you send out too many credit card applications, it could ding your credit score.