Whether you are a student or not, if this is your first time to handle a credit card, this post was written just for you. Read on the rest of the post to know the available options you have when applying for your first credit card and learn tips on how to use your card for building good credit.
Student Credit Cards for First Time Cardholders
If you are a student, then you can either apply for a student credit card or a secured credit card. It is interesting to note that the New Credit Card Law restricts students who are below 21 years old from getting student credit cards unless they have a co-signer or they can show proof of independent income.
Meanwhile, a secured credit card requires a security deposit so be prepared to submit an upfront payment when you apply. The security deposit may range from a minimum of $200 and above, depending on the credit limit you wish to get. For students, it is best to start with the minimum required deposit as a lower borrowing limit will encourage them to exercise more control over their spending.
Another option is to get a department store card or a gas card. However, most merchants who Issue these cards are more stringent in reporting late payments to the credit bureaus. Also, these cards can be used for payment at selected shops only which can be a great inconvenience.
What about prepaid debit cards? There are debit card issuers that now offer credit reporting but you need to watch out the fees! Although you will not be charged with APR, some debit cards may come with too many fees which can really be a burden. If you do not pick the right one, you may end up paying for more than you bargained for.
Use Your First Credit Card for Building Credit
See to it that your chosen credit card will report your payments to the major credit bureaus. Remember, your primary goal for getting a credit card for students is to build-up your personal credit history. Therefore, it is crucial for you to maintain an impressive performance as a cardholder.
It is not about how much you charge to your credit card each month. What matters most is how consistent you are in paying off your charges. Submitting your payments on time is the key to keeping your credit history in good standing.
Don’t bother to carry over a balance in your credit card from month to month as it will not have a bearing in your credit rating. Paying off your monthly balance in full each month is more likely to impress potential lenders than leaving unpaid charges in your account.
Before signing up for your first credit card, spend time and effort studying the Terms and Conditions of your chosen Issuer. Bear in mind that the only way you can compare credit cards accurately is by checking the fine print. Making the wrong choice today could bring about problems later on so be diligent with your search.
About the Author