When applying for your first credit card, you’ll need to know the responsibility that comes it. It means the start to your credit score and monthly bills, so you need to prepare yourself for what you’re signing up for. Here’s what you need to know.
What is a Credit Card?
A credit card can get tricky when you’re new to it. It’s a card that allows you to borrow money from a bank to make purchases, as long as you pay it back within the period. The “grace period” is the 25 to 30 days you’re given to pay back the money you borrowed. If you don’t pay it back in the time, you’ll have to pay interest. If you’re good with your card and pay your credit balance in full on time each month, you won’t have to face being charged for interest. The whole goal of a credit card is to build your credit, not hurt it. The better your credit score is, the better the cards you can qualify for.
How Credit Cards Work
Credit card companies make money in various ways: transaction fees, interest payments, annual fees, and late fees. The ones you should worry about the most are the interest payments and late fees. It’s best to pay more than the monthly minimum payment due every month, however, you need to make sure to at least make minimum payments on time. Not making on-time payments will result in late fees and higher interest rates. That will negatively affect your credit score.
If You’re Just Starting Out
When you apply for your first credit card, you’ll need to work on building your credit first. You can then qualify for the best credit card on the market. You can also get a secured credit card. With a secured credit card, you are required to put down a refundable security deposit that which becomes your credit limit. Credit companies are more willing to give secured credit cars to people with credit or no credit, so it’s a good option to have if you’re just starting out.
It’s also smart to find a co-signer when you apply for a credit card (a parent or a friend). However, the co-signer will be responsible for paying your debts if you fail to do so, so make sure you pay your bills efficiently and on time.
If You Fall Into Debt
If you so happen to fall in debt after opening your first credit card, we can help. Consumers can connect with a live person who will provide reliable information and help with debt reduction. Learn how to pay off your debt faster. Our repayment experts are online now to assist you with your questions.