Building a Healthy Attitude Towards Credit Cards
Signing up for a credit card might seem scary at first. With every swipe and purchase, you’re spending “money” that you’ll have to pay back eventually.
On one hand, a credit card or two can help build your credit for your future car or house or give you extra padding if an unexpected bill lands in your inbox. On the other hand, if you rack up more credit card debt than you can pay, you’ll be drowning in it while your interest accumulates.
But that doesn’t have to be the case with everyone. With responsible spending and monthly payments, you can pay back your debts with no or limited interest accumulated. If you don’t own a credit card yet, here’s how and why you should get started.
How to Apply for a Credit Card
Applying for your credit card is like looking for your first job. All of the job descriptions list “5 or more years of experience required.” But how can you gain experience if you can’t get the experience in the first place?
The same goes for a credit card. It’s hard to get approved for your first credit card if you have limited or no credit history. But just like persistence landed your first job, that’s how you’ll get approved for you first credit card. When you start applying, make sure you follow these two tips:
Enter Your True Income
Credit card companies analyze your debt-to-income ratio before they approved you for a card to see your capability of making payments. If you earn any money outside your full-time job, make sure to include it on your application so companies can get a true sense of your income.
Become an Authorized User
Being listed as an authorized user on someone’s credit card can increase your score. Look to a friend or family member who trusts you and ask if you can be added onto their credit card.
When and How to Use Your Credit Card
After the hard part’s over, and you’ve been approved for your first credit card, be careful how celebrate. You should always avoid debt with your credit card. You don’t want to head toward a path of debt on the first day with an extravagant and expensive night out.
So, when you choose to swipe your credit card, make sure you swipe within your means. If it’s an amount you’re unsure whether you can pay the following month, it’s better to hold off until you can calculate your finances. And when it comes around the time to pay you credit card bill, try to pay the outstanding balance every month rather than the minimum payment.
The Benefits of a Credit Card
Some repairs or emergencies need to be taken care of as soon as possible. If you find yourself in a pinch like a burst water pipe or a broken car battery, your credit card can help out as an emergency fund if you don’t have an established savings account.
Your credit card can also help you build your credit score for that car loan or mortgage you know you’ll need in the future. Make sure you practice responsible habits with on-time payments to let creditors know you’re a trusted person who can be lent money.
Some credit cards even let you earn money while you spend it. A variety of credit cards offer rewards like cash back, gift cards, airline miles and discounts.
If you’ve always shooed away cashiers asking if you want to apply for a credit card or thrown out those applications in the mail, put them into consideration next time and build your credit today.