If I were to sum them up, it would be damned if you do, damned if you don’t.
“Get one, it will help with your credit.”
“Don’t get one, it will ruin your credit.”
Who’s right, and who should you believe?
We are all humans and very imperfect at that.
So, you need to make decisions based on what works for you.
Without trying to confuse you more than you already are, here are several things you MUST consider before getting a credit card.
It’s what I wish I knew when I was 21, and it’s what I had to learn the hard way.
So before getting your next credit card, consider these questions first.
1. How Responsible Are You?
Responsibility is the absolute most important thing when getting a credit card.
Considering the fact that only 29% of Americans are financially healthy, you can tell where you fall in regards to being “financially healthy”.
Do you think you’re a responsible person?
If you pay your bills on time, you might be responsible because your payments are less than $100.
Will that all change if you have a $5k credit limit?
You know yourself best, and you can answer that question.
Other things to look at are if you’re one that is always on time or one that is always late.
Do people trust you to bring whatever it is that you said you were going to bring and also be on time?
Just be honest with yourself and really think if you can be responsible for handling money you don’t own.
2. What do You Need/Want a Credit Card For?
If there’s one thing you should know about credit cards, it has to be what YOU will need it for.
In most cases, you want to get a credit card to build credit.
That’s how it all starts until you struggle to make ends meet.
Do you want to get a credit card to build credit?
Do you need money right away?
Those are the common reasons why anyone would get a credit card and also what you need to put some serious thought into.
If you want to build credit, make some purchases and pay them off immediately.
If you actually need money?
Use what you NEED and pay as much of the balance as you can.
Don’t let it build to where you find yourself in some serious debt.
3. Are You Trying to Gain Benefits
I never wanted a credit card, although I did get many in my young adult life.
I had the best credit, and it was really simple to make payments and ultimately get out of debt.
That was great until I decided to get some miles.
That is one of the best perks of getting a credit card and one that you can benefit from IF you are responsible enough.
Many credit cards offer airline miles, cash back, and other benefits that we can use.
Remember why you got the credit card, especially when you start buying many useless things.
Get your miles (because you’re going to spend the money anyway) and pay off that balance as soon as possible.
4. Do You Have a Secure Job?
There comes a point in some people’s lives when they are faced with some of the most challenging things they will ever face.
You have all kinds of bills that need to be paid, and it seems that you won’t have a job.
Some resort to getting loans and credit cards to pay for other bills, and that’s not something you want to do.
If you know or feel that you might be out of a job, a credit card is the last thing you want to get.
Talk to your boss about other opportunities and, most especially, talk to the banks and companies that you owe.
Just because you have bills does not mean it’s the end of the world.
Most people will work with you, and sometimes they can give you some time to make payments.
Just don’t run, and you’ll be fine.
And, if you want to make some side cash, consider a side hustle or making money online.
5. What Do You Know About Interest Rates?
Most new credit card owners know nothing about interest rates.
They know nothing about how much they are paying in interest, and they don’t know that they are throwing away hundreds and thousands of dollars.
There are many things you should know about interest rates regarding credit cards, but there are certain things you should know before getting one.
At the very least, you need to know your interest rate, how that converts to dollars, and how you can pay less in interest.
Know that your lower interest rate means you’ll pay less for each billing cycle.
Know that you will not pay any interest if you pay off that balance before the billing cycle ends.
Max out your credit card and pay the minimum amount due, and you can bet that you will pay lots of money on interest.
6. What do You Plan to Buy?
We got a credit card, we want to build miles, and now we need to know what we’re going to buy.
There’s a reason why gas, groceries, and dining out are the more popular purchases amongst credit card owners.
Some credit card companies offer more rewards if you dine out, while others offer more if you buy groceries.
Depending on your lifestyle and what you do regularly will help you decide what the best credit card for you is.
If you plan to make big purchases, remember all that talk about interest rates and shop within your means.
7. Do You Plan to Make Minimum Payments?
This isn’t something you know, but it is definitely one to consider.
Do you plan on maxing out your credit card within the first month?
Are you going to pay off the balance every month?
If so, remember that paying the minimum balance will not help you.
It will be the most convenient option as it leaves more spending money in your account, but it will leave you paying hundreds and thousands of dollars in interest over time.
Consider paying your balance or a good chunk of it every month and refrain from trying to spend every penny on your credit card.
Consider saving money instead, and you’ll see that you don’t need to make any unnecessary spending.
Conclusion – Apply Within Your Means
Although there are some amazing benefits that come with getting a credit card, there are definitely many flaws.
You might be trying to build your credit, but you can easily harm it if you’re not careful.
Credit cards are great for building credit but don’t sacrifice debt just to build credit to make a purchase to put you further into debt.
They’re also great for cashback and miles, but is it worth it if you’re paying more interest?
There are many things to consider before getting a credit card, and I hope these tips help.
I’m a huge fan of credit cards, as they will always be there if you need money immediately.
Just be responsible, pay your bills on time, and be aware of how much interest you pay for something that’s supposed to be helping you.
Remember that credit cards are a business, and these companies will give you money only because they will make more of it later.
Be smart, do your research, and get the right credit card for you.