Have you been thinking about adding a credit card to your financial profile for the first time? If so, then congratulations on making such a big step in your life.
Nevertheless, choosing the right card isn’t always as simple as it seems.
With so many options available, it could even be overwhelming for newcomers. For that reason, we’ve put something together for you to simplify this whole process. Thankfully, with our modern technology, it’s easier than ever to search for the right credit card.
Before You Apply for a Card, the Following Five Tips Should Offer You Some Valuable Advice.
Always Compare Multiple Options Before Choosing a Card
Suppose you were house shopping. If that happened to be the case, how many homes would you tour before you made an offer? In our case, we would tour as many as possible until we found one that met our standards. Searching for a credit card is much the same.
With the Internet, Comparing Your Options Is Easier Than Ever:
First and foremost, you’ll want to make use of every resource available. In the past, comparing different options involved a lot more legwork upfront. Now, a simple search online can provide you with more options than imaginable.
No Two Cards Will Be Completely the Same:
For each of those cards, read through the specific perks. As you will soon discover, every card has its own way of trying to entice new users. Not everyone will find the benefits equally valuable.
By Researching Them Thoroughly, You Will Avoid Any Hidden Surcharges:
Plus, since you’ve done so much research, none of the bills should ever surprise you. Had you not read all the fine print, then a hidden surcharge could be lurking right around the corner.
By Law, You Are Allowed to Review Interest Rates Without Applying
On some occasions, inexperienced credit users hesitate to ask for the right information. Of course, our cultural traditions tell us to keep financial facts hidden as a matter of our personal lives. Still, those same rules don’t apply when you’re speaking to the bank.
Your Interest Rate Determines How Affordable the Credit Card Will Be:
Undoubtedly, the interest rate is among the most prominent factors of credit cards. They determined, in large part, how much your monthly payments will be. Plus, as the interest rate goes higher, you’ll spend more money to pay off the principal.
Law Requires Financial Companies to Provide Customers With the Financial Disclosure Prior to Signing Contracts:
Thanks to our legal code, you have the right to request this information even if you don’t apply. Sometimes, people assume they must apply for the card before learning about its rate. Not only is this not true, but it could cause you to choose a card with an outrageously high one.
Different Types of Cards Will Feature Particular Types of Rewards
Perhaps, for most, deciding the type of their new card is the most harrowing part of the process. When you’re comparing different cards, it would be best if you keep the following categories in mind. That way, you can narrow down the search so you can focus your efforts on something worthwhile.
Types of Credit Cards
- Cashback Cards: These are popular cards for people who make tons of smaller purchases. With each purchase, you’ll receive a small portion back into your account as a cash bonus.
- Fuel Purchasing Cards: When you go to work, does your job involve a lot of driving? If so, then you would probably benefit from a fuel perks card quite nicely. These give you additional cash back for fuel purchases.
- Store Cards: Store cards are ideal for people who shop at particular retailers often. Generally speaking, they tend to feature better benefits for store fans. When shopping at the retailer’s store, you’ll get extra reward points. Thus, if you spend a ton of money at that establishment, it could be a great way to stretch your dollars a little further.
- Secured Card: Now, these cards may not be as exciting as some of the others. However, they serve an important purpose in the credit markets. For those who have credit scores on the low end, getting approved for a card can often be a struggle. If you happen to find yourself in those shoes, then you should try applying for a secured card. To receive one, provide the financial institution that originates the card with collateral. As the bills are paid, most companies tend to offer their customers the option to open up their credit lines.
- Balance Transfer Cards: Are you already the proud owner of a few guards? When you decide it’s time to pay them off, using a balance transfer card can be a great way to save on interest. These cards give consumers an introductory interest rate of 0% for balance transfers. That way, you can avoid paying interest on the cards you already own.
- Student Cards: Since they have a limited credit history, finding cards they can get can be a challenge. If you are a student, then you might want to check out one of these. Not only can you qualify more easily, but you can also receive extra benefits as a student.
- Travel Reward Cards:For those moments, when adventure calls, these cards are the perfect solution. When you use them, all travel expenses are rewarded with additional points.
- Unsecured Cards: Finally, these are among the most exclusive cards on the market. Generally speaking, you’ll want fair to excellent credit before applying. However, if you can get approved, they usually have the best benefits of the mall.
Once You Get a Credit Card, How It’s Used Impacts Your Credit Score Directly
Your credit score doesn’t stop being significant once you get a credit card. In fact, the way in which you use that card will have a direct impact on your score. By maintaining a low balance, you’ll ensure your credit utilization doesn’t rise excessively. In addition, it’s always the best practice to pay the bill at the same time each month. That way, you’ll be far less likely to forget about it once it’s time to pay the bill again.
When You Use Them Responsibly, Your Score Will Blast off:
If you struggled to get your first card, then you are probably aware of how important credit scores can be. Now that you have your hands on one of those coveted items, it’s essential for you to use them responsibly. By doing that, next time credit is a necessity, lenders will work with you more willingly.
Irresponsible Use Leads to It Cratering:
On the other hand, you could sabotage yourself after receiving your first card. If you forget to make your payment on time, then that missed payment will show up on your next credit report. Missing a payment tends to impacted quite drastically. On top of that, if you maintain a balance that’s above 30% of the overall limit, then your score will also drop.
Even Applying for a Card Could Boost the Score by Expanding Your Available Credit Limit:
Still, if you were to apply for a card, it could have a positive impact on your score. By expanding your available credit, your credit utilization will drop. As long as you don’t spend any more money, your existing balance will be a smaller portion of the total.
Without Established Credit History, There May Not Be a Ton of Options Available to You
Finding a lender that is willing to work with you for the first time can be an obstacle. Those who are interested in a new credit card might find that there are only a few options available.
To Expand Your Available Options, Improve Your Credit Score:
For this reason, using the cards responsibly when you get them is essential. If you are struggling to find a suitable card, then we recommend applying for a secured card.
In Some Instances, Secured Credit Cards Can Open the Door to the Credit Markets:
These are much easier for you to pass the qualifications. Since they require collateral, these represent much less risk to the institution.