How to Prepare For and Use Your First Credit Card

Applying for a credit card for the first time can be an intimidating experience, especially without the knowledge needed to make the right decisions. Choosing the first credit card can be even more challenging, and most people make the wrong decision the first time around. Properly preparing for the first credit card can prevent a lot of the issues caused by lack of foresight and irresponsible credit habits. The following tips provide the knowledge needed to avoid bad decisions and get the most out of that first credit card.

Learn What to Look For

Before applying for any credit card, it is best to learn what to look for in a credit card application, as this will prevent applying for cards that may be regretted in the future. There are three main aspects that should be considered on every credit card offer – interest rates, fees and penalties, and rewards, in that order of priority.

Fixed interest rates are preferable over variable interest rates, but people with no credit will find it easier to acquire a card with variable rates. The length and benefits of the introductory period should also be considered, as this will dictate how long purchases can be made with the card, without accumulating interest.

Become Financially Responsible

It is absolutely necessary to begin forming positive financial habits before the first credit card application is ever submitted. Start by learning the basics of budgeting, and begin budgeting every expense.

Ideally, it would be best to practice budgeting for at least a few months before applying for the first card, as this will provide the opportunity to gauge whether or not financial irresponsibility could be an issue in the future. Applying for the first credit card with the proper mindset is the best way to avoid the mound of debt that many new cardholders encounter within their first year.

Build the Credit Score

Contrary to popular belief, it is possible to build a credit score without having an unsecured credit card. Secured credit cards use finds that are deposited by the cardholder, which eliminates the card issuer’s risk because there is no lending involved. Some of these cards report to credit agencies, which makes them an ideal way to build a credit history without a real credit card.

Merchant credit cards can be used in the same way, and are also easy to acquire. After building a credit score with secured credit cards it will be easier to gain approval for more comprehensive credit cards with better features.