Getting Your First Credit Card
Getting your first credit card is a big financial milestone. A credit card is an excellent tool to help you build credit and establish financial responsibility. How you use your credit card affects your overall credit, and can impact bigger lending decisions down the road. It’s important to make sure you manage your credit card wisely so you can set yourself up for financial success for years to come.
Credit Card Benefits
A credit card provides more financial flexibility when making purchases. Rather than paying with cash, writing a check, or using your debit card to withdraw the funds from your checking account, a credit card allows you to use the funds borrowed from your credit card issuer. This comes in especially handy if you need to make a rather large purchase, providing you peace of mind in the event of a financial emergency. Credit cards can also offer additional financial protection for purchases, and many credit cards offer rewards programs in which you earn points on purchases that can then be redeemed for items such as cash back, merchandise, etc.
Building Credit
In addition to the benefits listed above, credit cards also help you establish credit history. Your credit card issuer keeps track of every purchase you make using the card, and every payment you make to pay off those purchases. Making your payments on time each month and paying off as much of your balance as you are able to helps build a positive credit history. This track record of your credit usage is used by lenders to determine how financially responsible you are and how likely you are to repay future loans like mortgage and auto loans, and also helps determine the interest rate you will qualify for. By building credit early in your financial journey, you will be able to build up to a good credit score, making it easier to be approved for loans in the future and receive better interest rates.
Applying for a Credit Card
You can apply for a credit card from a number of lenders, but be sure to do your research first so you know you are selecting the best option for your needs. Your credit union or bank is a great place to get your first credit card, since you already have an account and history. You may have a better chance of being approved through your financial institution. Another option to consider is applying through a credit card issuer, think of the big name credit companies like Visa®, MasterCard®, American Express®, and Discover®. Many of these companies offer beginner or student credit cards, built just for people getting their very first credit card to help you build healthy credit habits. You can also apply for a credit card at a specific merchant you frequent. Department stores and retailers offer store credit cards that may be worth it if you shop there frequently enough. Their application process is typically shorter than other credit card applications, and are often approved immediately in conjunction with additional deals so you can start saving on your purchase right away.
Now that you know the benefits of having a credit card and have researched your options to determine which type of card is the best fit for you, these tips for successful credit card usage will keep you on track so you can make the most of your new card:
- Remember that credit is not free money – You will have to pay back whatever you spend using your credit card, and with interest. Make sure you know your interest rate and when your payments are due before you start making any purchases.
- Don’t use more credit than you need – Don’t let yourself get tempted by a high credit limit or great rewards program and make purchases you don’t need, or request a higher credit limit than what you will actually use. Remember that keeping your credit utilization low will help boost your credit score.
- Pay in full and on time – Make your payments on time each month, and pay off your entire balance in full if you can. If you can’t pay in full, pay as much as you are able to, and reign in your spending so you can pay it all off by next month.
Start building your credit today! We are committed to helping our members build good credit and keep it there. We make sure our credit cards work for you, which is why we offer the lowest rates possible, low to no fees, great perks through the Scorecard® Rewards Program, and convenient payment options to make sure you never miss a payment. Plus, eligible members can view their FICO® Score for free within Digital Banking so you can always stay on top of your score. View our rates and credit card agreement for more information, or apply online now or over the phone.
At Robins Financial Credit Union, our mission is to enhance the financial well-being of our members and community. We honor this commitment by providing educational content to help you make the most of your finances. Read our other blog articles to help you gain the financial knowledge you need to succeed.