Getting your first credit card is a significant milestone and something you shouldn’t take lightly. There are so many options, so it can be challenging to pick the right one. Ultimately, it’s essential to choose a credit card that’ll help you build a secure financial future. Here are seven features you should look for in your first card.
Since this is your first credit card, you may not have a good credit score yet. You might not have a credit history at all. Because of this, you might struggle to qualify for a credit card. And if you apply to multiple cards, it’ll hurt your credit score. Instead of a shotgun approach, you should look for one designed for customers looking to build or repair their credit.
For example, a credit builder card is a great option to dip your toes into credit. These cards work like a regular credit card, so you can make purchases and pay your bills. The main difference is that they require a deposit upfront, which will be the same amount as the credit limit. This deposit works as a safeguard for the bank, and it can help prevent you from acquiring debt.
When choosing a credit card, make sure you’re aware of interest rates. Some banks will advertise introductory rates to attract users. While these rates are usually meager, maybe even 0%, they don’t last forever.
Once the introductory period is over, you’ll be forced to pay the regular interest rate. So make sure your decision isn’t solely based on a credit card’s introductory or promotional rate.
Before signing up for a credit card, find out what kind of interest rate you’ll qualify for. The better your credit score, the lower your interest rate. Of course, that doesn’t mean you shouldn’t shop around. Chances are, regardless of your score, you’ll find banks that will offer lower or higher interest rates than others.
Credit cards can be incredibly beneficial, but they can also wreak havoc on your finances if you’re not careful. Besides a late fee, some credit cards charge annual fees, cash advance fees, and more. You’ll want to make sure you’re aware of potential hidden fees so that you can avoid them. These are a few common ones.
Believe it or not, some credit cards charge users an annual fee just for having the card. These fees can cost as much as $500. The good news is, if you have a good credit score, some don’t require you to pay annual fees.
Do you travel for work? If so, you probably don’t want to be charged a fee when you make purchases outside the United States. However, that’s what happens with foreign transaction fees. These fees can cost you as much as 3% for every transaction.
If you transfer your balance to another card, you’ll have to pay between 3% to 5% of the balance. You’ll pay a fee each time you make one of those transfers.
If you accidentally spend over your credit limit, you can pay a fee to ensure those transactions are approved. If you don’t opt for this feature, your card will just be declined. You might think this sounds like a great card option, but spending over your card limit won’t benefit your finances.
You’re likely hoping to build credit with this card. Meaning you don’t need a high credit limit. You should probably opt for a credit card with a small credit limit. This works well because it’s often harder to qualify for a higher limit.
A lower limit is also safer for you as a card user. It will reduce your likelihood of acquiring a lot of debt because you’ll have a smaller balance. Hopefully, a smaller proportion will also make it easier to make your payments on time.
APR means the annual percentage rate. It’s the amount of interest on your purchases that you pay each year to borrow money. Most credit cards have APRs, but some don’t charge you that interest if you pay the balance in full monthly. In other words, pay the entire balance monthly so that your purchases don’t end up costing you more.
With that said, sometimes expenses come up, and you might end up carrying a balance to the next month. If this happens, you’ll want a low annual percentage rate. So compare cards to make sure you’re picking the one with the lowest APR.
Most credit cards offer rewards as incentives to use credit instead of cash or debit. The more you use your credit card, the more rewards you’ll earn. The most common types of bonuses are cash back, miles, and points.
Cashback credit cards let you earn cash for the purchases you make with your credit card. With these cards, you’re able to redeem your money rewards. Other cards offer miles, which users can use to book a flight. Points work similarly and can go towards gift cards, hotel stays, and other items.
While most credit cards offer rewards, not all are the same. Make sure you look for a credit card with rewards that complement your lifestyle.
When it comes to keeping your finances secure, you need to partner with the right financial institution. These days, most banks offer some security. Some banks have two-factor authentication. Others have real-time alerts to let you know if there’s suspicious activity on your card. Better ones have both and more.
Not all banks have the same level of security. With your financial future at stake, you want to ensure your money’s safe. Before choosing your first credit card, research the measures the bank takes to keep you safe from fraud and theft.
Regardless of your age, choosing your first credit card can be difficult. Why? Because there are so many options. While it might seem like all credit cards are pretty similar, they differ in many ways.
From fees to rewards, there are several features to consider. That’s why it’s so important to explore all your options to find the best card for your financial goals. With the tips above, you’ll be able to find a card that fits your lifestyle.