Credit cards offer a lot of perks and are a great way to build credit for when you want to get a loan. Despite the negative notions associated with it such as being in debt, owning one doesn’t always mean that you have to be in such situation.
Once you get used to having a card and know how to use it well, you’ll find that having a plastic card is a quicker and more efficient way of shopping and a good way to budget your money.
But before you proceed to get a credit card and fill out an application form, make sure that you do your research to avoid encountering issues that might leave you in a financial crisis.
Here is a list of things to remember when getting a credit card:
Pick the Right Card
Various credit cards are offered by different banks nowadays, so before picking one, visit different banks, pick up those leaflets in the malls, and find out everything about the card companies that interest you.
Check out the details of each card so that you know what you’ll be getting out of it. Some of the things you should consider include the credit limit, interest rates, perks, and rewards.
Another thing you should be looking at when picking the right card is the fees that come with it. You’ll find out that there is an annual fee, balance transfer fee, foreign transaction fee, late payment fee, and over-the-limit fee. All of these are important to know before availing a card so that you know what else you are be paying for.
Always Pay on Time
You might brush off paying for your credit card on time, but this is something that you should never forget. You don’t want to give yourself a shock with penalties and late fees.
Not paying on time will also raise your interest, which could result in a bad credit score. Consequently, it would affect your chances of approval should you take out a loan in the future.
Know the Difference Between a Secured and Unsecured Card
A secured credit card requires providing a security deposit.
This type is ideal for those with bad credit or no credit history at all, as the credit line be likely anywhere from 70% to 100% of your security deposit.
On the other hand, an unsecured card doesn’t require a security deposit, which makes it ideal for those with a good credit score. This type also offers amazing rewards programs such as cash back, miles, and points.
Evaluating your finances can help you determine which credit card to pick.
Interest Rates Can Be High
Another important thing to consider is the interests that you will be paying for. Some cards can have a higher rate than others, so this is something you should not miss before getting a card.
Not paying on time will not only subject you to paying for more, but also affect your credit score.
Avoid Minimum Payments
By making minimum payments, you can land yourself in debt. Not only will it take you longer to pay for your credit card, but you’ll also be paying more because of the interest rate.
Make sure that you can afford to pay off more than just the minimum payment to avoid paying more than you should.
Only Swipe When You Know You Can Pay
Most people tend to use their cards hastily without checking first if they can afford it. If you charge big amounts on your card and can’t afford it, you might have to take another loan or pay a larger amount because of interest. You’ll find that it will be harder to save and track your expenses.
So, the next time you swipe your card, make sure you can pay it off.
Make A Habit of Checking Statements
If you don’t track your expenses or make a budget often, now’s the time to do so. You might check your accounts whenever you feel like it, but these bad habits must stop.
When you have a credit card, you must be aware that identity theft or fraud can happen to anyone such that someone else is using your card.
So, check all your payments regularly and always be aware of every transaction made with your credit card. If possible, keep all your receipts to not miss out on a purchase.
Getting a credit card can be a tricky decision, and you might be debating with yourself for a while before getting one.
Then again, a credit card can help you budget your money and would be beneficial for emergencies.
By bearing these things in mind, you’ll certainly do fine and be a responsible credit card owner.