Taking out a credit card is pretty much a must these days. It’s not simply a matter of convenience – it’s a basic requirement for certain things, such as purchasing freely on the internet, booking plane tickets, and more. Sure, there are workarounds for most of those, but a credit card can make most of those processes a piece of cake.
In addition, you’ll get to benefit from various attractive reward programs and loyalty bonuses. This is a deal you can’t really get with anything else. Credit cards are somewhat unique as a financial tool in this regard, and learning to take full advantage of them is important. With all that in mind, here are a few tips to keep in mind before signing up for your very first credit card.
Pay Attention to Interest Rates
Interest rates are by far the number one factor you’ll want to consider when comparing credit card offers. You’ll find that every company on the market pretty much does its own thing, and it’s hard to talk about any unified rules that you can rely on. Things get even messier when you realize that some of the best interest rates are offered as temporary promotions that you may not find available every time you look.
In the end, this will be the most critical factor in your research. You’ll have to make sure that you’re getting the best interest rate your current situation allows for. And if the available options aren’t too attractive, perhaps it’s time to think about improving your situation in the first place.
Can Your Improve Your Credit Score First?
Which brings us to our next point. Your credit score will be the main deciding factor when trying to get good conditions on your credit card. If you want to maximize your chances at getting a good deal, your focus should be on fixing any issues you might have with your credit history. Pull your report and see what your score is right now. Go through the list and see if there are any suspicious entries that you might be able to get removed.
And if you can afford to wait a few months before taking out your credit card, it would be a good idea to use that time to improve your credit score as much as you can. Pay off any outstanding lines of credit that you might have, and be on point with all your bills. Small things like these can add up quite fast in building a good score that will impress creditors.
Take Advantage of Special Programs and Promotions
We already touched on this above, but it’s important to expand a little. Many companies that offer credit cards will run various promotions from time to time, which can give you access to special conditions on your credit card that you might not be able to get otherwise. Things like lower interest rates, extended repayment periods, 0% interest rate grace periods, and more – many companies can get quite creative with their offers in order to entice new customers.
Of course, take a look at the fine print. If a deal sounds too good to be true, there’s probably a little more to it than meets the eye. As long as you keep your eyes open, you should be able to avoid problems of this type.
Be Prepared to Actively Use It
A credit card only makes sense if you’re prepared to actually use it on a regular basis. It’s considered a line of credit with respect to your credit report, which has certain implications. One of them is that keeping your card unused can drag down your credit score over time. This may not always be the case, but it’s worth keeping in mind if you want to avoid unpleasant surprises.
As long as you plan ahead and know what your financial capabilities are though, this shouldn’t be a problem. It can actually be a bit freeing to make certain purchases with your credit card, and know that you have until the end of the month to pay them off. The only potential problem here is if you start getting irresponsible and careless. Just because you’re allowed to pay later doesn’t mean that you should do this for every single thing that you purchase. That’s actually a good way to find yourself in financial distress.
When used right, a credit card can be a great addition to your financial assets. It can expand your range of options in any situation, and can give you much more confidence in dealing with daily financial matters. But it’s important to use it carefully, and always make your payments on time.