What should you look for when applying for your first credit card? What are good but not SUPER risky ways to start building credit?
What You Need to Know
- Looking to move out of your parent’s house? Many rental companies will not rent to you if you don’t have credit (in this case you would need a co-signer on your lease who does have credit). Credit cards are also there when your pay check is late or you accidentally total your car and can’t pay the expenses out of pocket. See also.
- Sitcoms and daytime television shows always led me to believe that being approved for a credit card was such an easy process. Maybe it was back in the day, but nowadays it’s harder to get one. If you have no credit, it’s easier to apply for a credit card through a department store like Sears or Target, than it is to get one from an actual credit card company like American Express or Discover. If you’ve been with your current bank for a long time you might also be able to apply for a credit card through them. This is a pretty comprehensive post about credit cards.
- Spend lots of time researching your options to decide which credit card is best for you. It’s okay if that means Target for the time being, after you’ve built up credit you can always apply for a more illustrious card. Lots of credit card companies offer different types of rewards, like discounts on gas or Amazon purchases, so look for one that best suits your needs.
- The most crucial part of owning a credit card is paying on time. If you don’t pay on time, they’ll charge you interest. Don’t let them take any more money from you then they already are! If you’re someone who has a hard time paying bills, set up autopay on your account. Here’s a pretty extensive article about that. And here’s why you should pay on time.
What to Charge
- I don’t like to reserve my credit card use for only super expensive items. Feel free to use your card for your ever day purchases! I use mine for gas for your car, McGriddles, and any CVS purchases I make that are under $20. There’s no official playbook stating that you can’t put a $1.50 charge on your credit card, and if it’s helping build your credit- why not?
- It’s super important to never use your card as a replacement for money you don’t have. Don’t drop $150 at Victoria’s Secret if you won’t have that same $150 in your bank account by the end of the month.
- Use your card in the event of an emergency. It’s impossible to predict when your car’s tire might go flat our your cat may need to be taken to the hospital. As the majority of us get paid on a bi-weekly pay cycle, there may be a time in your life when you’re waiting to get paid, but still have to deal with surprise expenses. This is the time to use your card, in lieu of the money that you know is on its way, but hasn’t arrived yet.
- I have my credit card set up so that any purchase I make gets automatically paid by my debit card. For example, I go to Starbucks and spend $5 on a coffee, paying for it with my credit card. Instead of waiting until the end of the month, that $5 is charged automatically to my debit card, so my credit card debt goes back to $0. Boom!
Hope this helps!