There’s a lot of conflicting information out there about credit cards. Some of it can be pretty scary, or at least, if made to sound pretty scary. In a way this can be a good thing; you certainly don’t want to get into debt so deep that it becomes difficult to repay. However, having a good credit score is sometimes essential to some of life larger decisions, such as buying a house for example. See here for a closer look at the value of a good credit score and how it can affect credit card rates.
As long as one is careful, opening a credit card can be a good idea as it is a quick and relatively easy way to build credit. If you’re unsure about how to start, we can help.
Decide What Types of Rewards You Want
This might not be obvious at first but a good starting point is deciding how best you might use rewards. Many credit card companies such as these offer rewards points that you can redeem at a later date once you’ve accumulated a certain amount. These are most often used for travel, or can be exchanged for cash. Travel cards tend to have better sign-up bonuses and on-going benefits. However, a cash rewards card might be best if you don’t travel often.
Fee or No Fee
The next step is deciding whether you want a card with an annual fee, or not. Fees can be up to a few hundred dollars annually, but are typically less. The advantages of a card with fees are that they tend to have more valuable rewards and benefits.
We recommend taking the time to consider how often you’ll use your credit card before you choose one that does have the fee. You’ll need to earn at least the same amount in rewards as the fee itself, in order to offset the cost. If you won’t be using the card regularly, consider a no fee option.
Handle Things With Care
Once you’ve made the choice as to what type of card you want with regard to the above, there are a variety of companies that will happily offer you multiple options of everything you could possibly want. It can be a bit overwhelming. When you do get the card of your choice, there are some basic things to keep in mind before you begin using it:
1. Borrowing is different from spending. Borrowing for what you can’t afford creates debt.
2. Pay your bill in full (not just the minimum) whenever possible.
3. Pay timely, so that interest doesn’t accrue.
4. Don’t use your card too much.
Take these steps into consideration and even as a newcomer to the world of credit cards, you’ll have the knowledge you need to build some credit, with less risk of acquiring debt.