Credit Cards 101: When and How Should You Get Your First Credit Card?
Credit cards can either be a temporary solution to your financial problems, but they can also lead to bigger and longer term issues. Credit cards allow you to spend, even if you don’t have the cash handy. This makes spending effortless and quick, which is a dangerous combination with most of our impulses. It can lead people into misusing their credit card, which will often mean that you’re spending more than you earn. That’s how so many people wind up in debt.
While you can also consider simply refusing to get a credit card to avoid the temptation, the fact is that having a credit card and being responsible with it has advantages. If you ever want to buy a house or a car, you’ll either need mountains of cash or you’ll have to take out a loan or a mortgage. To do that, you’ll need good credit, and the best way to build up a good credit score is by having a credit card that you use and manage responsibly. Some companies even ask for your credit report in order to assess an rental applicant, so we need to accept the fact that credit cards are an indispensable part of finance.
When Should You Get Your First Credit Card?
As long as you have the ability to pay for your credit card bill, you might want to consider getting a credit card as early as you’re able. It’s better to have one and not need it (yet) than to need it and not have it. There are many credit card options out there, and that’s where things get rather tricky. However, thanks to technology, you make use of a credit card widget like GoBear’s to determine your best credit card options.
Now, it’s easy to buy things that you can’t afford. Credit cards have a way of making people spend money that they don’t have. It’s as simple as a swipe, after all. And taking into consideration the many ephemeral wants that young adults have, getting a credit card this early can be a risky move.
However, what you need to keep in mind is the purpose for which you’re even getting a credit card this early. The main objective here is to build a good credit history early. This adds up later on in life when you have a much bigger income and you’re then able to make bigger purchases.
Acquiring a Credit Card Without Credit History
It’s become a common joke for people who just got out of school and look through entry level job applications to see:
“You need X years of experience to work here”
“That’s why I want to work here, to get work experience.”
Credit card applications are pretty much the same way. Again, you need to remember the whole purpose of getting a credit card is to build good credit. Get in touch with your bank and tell them why you want to apply for a credit card. For these scenarios, there are two solutions that the bank may offer you:
- Low-limit credit card – which has a low credit limit so you aren’t able to get into massive amounts of debt.
- Secured credit card – which requires that you have cash in a bank account which you can use to cover the purchases you make with the credit card.
Whichever option you end up with, you’re going to have to show your bank that you’re able to make use of your credit card responsibly. Building good credit is no different from building a good reputation. It takes time, discipline, and consistency.