A lot of people can be tempted to get a credit card and we can totally agree with this since it was a couple of advantages which can’t be ignored at all.
On the other side, there are a few very important things you should know before opening one. After all, you don’t want to end up with a lot of credit card debt, right?
Today we’re going to talk about three of the most important aspects you should consider when you decide to get a new credit card.
Know how it works
In this case, the idea is simple. When you buy something with a debit card, it takes money from your bank account immediately. On the other side, when you buy something with your new credit card, you get to pay for it later.
Technically speaking, instead of owning the store money, you’ll owe your credit card company, who made the payment upfront.
Sure, this can be great for whenever you have an urgency and will eventually pay for it shortly when the bill comes. However, it can be very dangerous if you have the tendency to buy more than you can actually afford. If you don’t pay your bill each month, you will start stacking debt and deal with late fees and interest. Wouldn’t it be better to stick to your old rewards cards instead of this?
Decide if you really need one
In most cases, you really don’t need it. In most cases, if you’re trying to stick to a budget or already have credit card debt, you might as well stay away from the plastic.
Of course, there’s one good reason to need one: you want to start building credit. This will contribute to your credit score, which will impact everything, starting with your chances of being approved for a home loan and ending with the interest you will pay on it.
Let’s not forget about the level of security they add, something which debit cards don’t do. For example, if you lose a wallet, you can instantly cancel the credit card and dispute the charges you didn’t make.
What to look for in one
Finally, let’s not forget that there are a couple of things you should look after when deciding upon the card. There’s the APR and the annual fee, which should be as low as possible, as well as the credit limit, which, usually, should be high. But