Credit Card

3 Tips Before You Apply for Your First Credit Card

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Cash back, rewards, bonuses, insurance and perks.

That about sums up why credit cards have an edge over debit.

Not so fast though. Because that’s not the full story either.

Sure, credit cards open up doors to things you want. Right now.

But part of adulting is responsible spending.

Because credit cards can also open up doors to years of financial struggle – if you’re not careful.

#1. Only spend what you can back pay in full

Yep, whatever you spend on your credit card is borrowed money, which they’ll start collecting back in 30 days. If you can’t pay back in FULL within that timeframe, you pay an interest rate of around 20% (or higher) which will compound every month unless you start chipping away at it.

#2. Do your homework

Not just in class. In real life too. Actually, most of all in real life.

While you’re at school (and your income is low), cards with no annual fee are probably your best bet.

Here’s the thing. Even if you apply for the best no fee credit card, there are no guarantees you’ll be approved. Most financial institutions have a minimum income requirement as part of the criterias they assess when deciding whether they approve you or not.

Keeping that in mind, they have specific cards geared towards students (or those just starting out).

#3. Stick to one card for now

Think of this as a test. How well you do managing this one card for a period of time (at least a year) will give you an idea about your spending and payment habits.

You’re doing great if your monthly payment goes towards your balance (never interest).

What if you find that you’re overspending? Freeze it (literally in a block of ice) until that balance is paid in full.

Emily Wilson

Emily Wilson is 3rd-year University student at Brigham Young University and  Financial Writer for University Magazine and Edmonton Gazette

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