A Beginner’s Guide to Credit
By Rachel Seitz
If you’re looking to sign on to your first credit card, or even a new one, there are a few things you should know before getting involved. Adding credit into your financial repertoire can be an exciting thing to do in any person’s life, but there are some important aspects to educate yourself on before you start going on a shopping spree.
What Is Credit and How Does It Work?
It may be challenging to get approved for your very first credit card, so it’s definitely ideal to do your research on the kind of credit card you desire. A credit card, as opposed to debit, is a form of payment where you don’t have to have the money upfront. Instead, the amount you charge to credit is paid off in bills later on.
Credit is perfect for larger (or even smaller) purchases that you don’t necessarily see the benefit of taking large sums out of your account for one particular purchase. Instead, you’re “borrowing” the amount you’re looking to spend from your bank, resulting in a balance that you will pay back in the form of a bill.
One thing you’ll want to keep in mind, though, is that you should always keep on top of your credit.
Credit cards are a useful tool, but they can be either a benefit or a detriment depending on how you use them. That’s why it’s so important to consider carefully which type of card (and how many) is best for you, and how you can be sure you’re taking the right steps to keep your credit report healthy.
Selecting a Card That Fits Your Lifestyle
In your search for the perfect credit card, there will be plenty of options to choose from, and it’s important to know what to look out for and what will benefit you most. For starters, you’re going to want to figure out and compare the important factors of each card.
These are all different variables to compare when it comes time to figure out which plan will best accommodate your spending habits.
Rewards and perks are also something to look into, as some credit cards often have great rewards like cash-back, travel points, and more. Depending on what you’re looking for out of your credit card, this can be a great way to earn a little extra while you spend.
Don’t be afraid to do some research and check out different credit card guides online to see what may be in your best interest.
Maintaining Good Habits
At the surface, the best habit you can maintain when dealing with your credit is paying off your balances in a timely fashion. There’s no doubt that unforeseen financial hurdles occur in life and dealing with them can be tough, but keeping track and staying on top of your spending is the easiest way to avoid debt.
Paying in full (if possible) will always be your best bet so that you don’t have to worry about any outstanding balances that can potentially creep up and get penalized by fees and reductions to your credit score. Try out different online banking apps that can help take care of your money and keep you on track of your personal finances.
These kinds of personal finance platforms are great for keeping you aware of your spending habits and how you should be budgeting accordingly.
Another tip to stay on top of your payments and keep your credit strong is to set up automatic payments, which will enable the amount due each month to be withdrawn automatically from your bank account. This way, you won’t have to worry about missing a payment because you forgot about it or mixed it up with another due date.
For more tips on keeping your credit in line and maintaining a great credit score, check out our full guide to keeping healthy credit!
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