5 Essential Things to Know Before Applying for Your First Credit Card

5 Essential Things to Know Before Applying for Your First Credit Card

Credit cards allow consumers today to enjoy various conveniences that cash simply doesn’t offer.

With plastic, you don’t have to bring wads of cash if you want to buy something expensive. You won’t have to worry about losing or misplacing your money or getting robbed. And even if the item you wish to buy is a little bit pricey, you need only bring a credit card to purchase it. 

With the right charge card, you have the option of paying for your big purchase in installments with no interest. Because of this, you will find it more convenient to pay for your merchandise without extra fees.

Also, if you apply for a credit card with no annual fee, you won’t have to pay this yearly charge, so you save money merely by owning this temporary yet convenient source of funds. Moreover, if you choose the correct product, you will earn rewards and have access to various perks with every purchase you make.

Getting the Most Out of Your First Charge Card

Enjoying all these benefits (and others not mentioned) depends greatly on getting the right credit card.

You can be sure to end up applying for the best credit card and get the most from it by knowing these five crucial things first:

  1. Your financial health

The first thing you have to ascertain before shopping around for the best credit card is how financially stable you are.

By assessing your financial health, you will have a good idea if you can afford to have a credit card now. Keep in mind that once you start using a charge card, you will receive a monthly bill that you will have to pay in full or in staggered amounts.

If you can’t include paying for monthly credit card bills in your current budget, you may have to postpone your application for the time being.

You can evaluate your financial health by considering your monthly income, the amount of money you have in the bank, and anything you possess with a high value that you can sell in case of payment complications (something you would do well to avoid, of course).

Additionally, consider the debts and obligations you owe. If you are still paying for a student, car, or personal loan, it would be best to check your credit score first to find out if it is good enough for you apply for a charge card.

In case your credit score is excellent but you’re not sure if you can pay for your existing loan while also paying for the purchases you will make with your plastic, it might be best to hold off getting a credit card.

  1. Your eligibility

Banks and credit card providers will consider your credit score in their decision to approve or deny your application. They will use this to determine your credit limit as well.

However, credit card providers will consider other factors, too. Generally, you have to be at least 18 or 21 years of age to apply for a charge card.

Also, you need to have a steady source of income. If you are working, your salary will be one of the main factors which the credit card provider will consider in their decision to approve or reject your application.

  1. Your purpose for getting a credit card

The different types of credit cards today are optimized for a specific kind of use. To get the most from the one you will apply for, determine your needs and objectives for obtaining this product.   

In case you want a credit card because you regularly travel, look for one that comes with excellent airline miles, travel and hotel rewards. If you intend on using it for shopping, find a product that offers terrific retail and cashback perks.

If you think you will likely carry debt on your card, you should look for products that have low-interest rates and even promotional financing offers.

  1. Credit card fees, terms, and conditions

Sign up and usage provisions, rates, fees, and rewards vary from one card to another. As such, it is crucial that you know beforehand what you will be getting before you apply for a particular product.

Request for a copy of the complete terms and conditions of the credit card you want to get. Next, make sure you read and understand everything, especially the fine print.

Pay particular attention to APR or the annual percentage rate or interest rate. Additionally, find out if this fee will increase if you miss a payment or are late in paying for it.

Also, check if the card comes with an annual fee. Be on the lookout for other charges such as those that come with balance transfers and foreign transactions.

Make sure you are comfortable with these fees and that they offer valuable benefits. If not, look for another product.

  1. Perks and rewards

Lastly, the best credit cards come with both valuable benefits and rewards. This means that aside from the usual perks you will get from the type of product you will apply for, you will have access to hidden ones as well.

You will also read about sign-up bonuses and other perks in the agreement you will sign. Some cards, for instance, offer travel insurance or free roadside assistance.  

Keep in mind that some bonuses and perks aren’t made explicit, so take some time to research which ones meet your needs or will enable you to save money.

Before you compare bank credit cards online, be as informed as possible. By doing so, your chances of getting the best one that meets your needs and lifestyle and won’t put you in a debt trap will be higher.

 

 

Categories: Finance

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