WalletHub, Financial Company
Before applying for a credit card - especially if it’s your first one - you should know that credit cards are the best way to build credit and save money on everyday purchases. But it’s also good to know that credit cards can lead to bad outcomes, such as overspending and racking up expensive debt, if used irresponsibly.
The potential for bad outcomes is why you should learn the basics of how to use a credit card responsibly before you apply for one. It’s also good to know what you’re going to use the card for and what your credit standing is before you apply. That will make it easier to get approved for the best deal.
We’ve outlined some tips below to help you maximize the pros of credit cards, while minimizing bad outcomes.
What to Know Before Applying for a Credit Card:
- Credit cards are the best way to build credit. For that reason, everyone should have at least one credit card for credit-building purposes. You don’t even need to make any purchases to benefit from a credit card, if you are concerned about overspending.
- Shop around before you decide on a credit card. There are more than 1,000 credit card offers available, from rewards cards to travel cards, store cards to charge cards. So it pays to comparison shop.
- Approval can take some time. It may take up to 10 business days to receive a decision after applying for a credit card. It depends on how well you qualify for a credit card, how you apply, and how fast the card issuer can verify your information. Some applicants may get instantly approved or rejected, though.
- Use credit cards responsibly. All major credit cards report account information to at least one of the three major credit bureaus each month. On-time payments and low credit utilization will help you build a good credit score.
- Once you turn 18 years old, you are eligible to apply for a credit card. But you can only use independent income as your annual income on the application. You’ll be able to use shared income, such as from a parent or spouse, when you turn 21.
- Be careful to avoid spending more than you can afford to repay. Overspending on a credit card is a recipe for debt. Credit cards have high interest rates, and we already owe more than $1 trillion in credit card debt overall in the U.S.
- If you’re a first-timer, you may have a harder time getting the credit card you want. If it’s your first time applying for a credit card, you may be starting out with limited credit history, so the best of the best credit card offers won’t be within reach yet. Students with no credit history will have easier approval odds with student credit cards, and many credit card companies offer them. Secured credit cards are also available to people with limited or damaged credit, and can help you build up your credit score.
- Know what you want to use the card for. This will tell you what type of credit card to look for. Cash back credit cards are good for everyday purchases, while travel rewards credit cards can pay off for people who travel. If you want to finance a big purchase, look for a 0% APR credit card.
The world of credit cards can be exciting and maybe a little overwhelming, especially if you’re just starting out as a credit card user. If you’re having trouble digesting all the options, WalletHub’s CardAdvisor can be a great tool to help you decide which credit card is right for you. Or, sign up for a free WalletHub account for more personalized credit card recommendations.
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