You’re finally applying for a credit card. It’s both an exciting and scary thing.
On one hand you’re looking forward to the freedom that comes with credit card purchases. You’re not solely limited by the fraction of disposable income that comes with your check. On the other hand, credit card debt remains one of today’s biggest financial issues. That doesn’t even scratch the surface of whether or not you want to apply for a mortgage loan in the future! Before you open a checking account, it helps to take in a deep breath and think about all the pitfalls you’re going to avoid.
Try these tips on for size so you can enjoy the benefits, not the detriments, of your credit card.
Be Aware Of Today’s Massive Debt Problem
Debt is such a common story you likely have dealt with it yourself, even though this is your first time applying for a card. It’s estimated the United States is faced with a debt crisis in the trillions, only getting worse by the day. Student loan debt, medical bill debt, and homeowner debt are among the most common. Credit card debt, however, remains its own monster. While this can sound pretty scary, the good news is that there are a lot of good habits you can build early to avoid this.
Figure Out The Limits Of Your Monthly Budget
What’s a good habit to develop before you open a checking account? Set some limits for your budget. This is something you already have a handle on if you have a few bills, so pat yourself on the back early. Your monthly budget should be averaged out between four and six months so you have a solid idea on how little, and how much, you’ll make. Write down your absolute must-haves, such as rent and bills, and separate them from lesser necessities, such as eating out and your Hulu subscription.
Talk To A Banker About Potential Loans
Why do you want to open a checking account or apply for a credit card? Are you trying to save up for a new car? How about putting down some payments for a house a year down the road? It’s best to sit down with a banker and explore your options. They can walk you through the steps of a loan application and catch you up on terminology, even if you aren’t quite ready to start signing.
Build Good Habits With Your Credit Card
It’s important to develop good habits early so you’re set up for success. These will act the part of your proverbial safety net, catching you when life throws you the usual curveballs. Credit cards should be used as a tool, not a crutch, and the best way to do this is to start simple. Use them for basic purchases, such as gas or food, and don’t go over a set limit. Slowly, but surely, you’ll build good credit that can go to an auto loan or down payment on a house.
Choose The Right Credit Card For Your Lifestyle
You’ve gone through your monthly budget and figured out any potential issues that could crop up down the road. You know what you want to open a checking account for and you’ve thought about your goals for the future. Now is a great time to sit down with your bank of choice and talk to a banker. They can show you the different types of credit cards available and help you figure out which one is best suited to your lifestyle. Some offer unique monthly benefits, while others have lower interest rates.
Credit cards are a great tool for saving up and navigating the maze that is life. Which one will you get this year?