Unlocking Financial Freedom
It can be challenging for a novice to get their first credit card, as these cards typically demand a high or exceptional credit score. A credit card can help you build a solid credit history, protect you from fraud and assist you in emergencies requiring quick funds. These cards also offer great rewards when you make regular purchases.
While credit cards can be a versatile and convenient financial tool, they can also cause overdue debt and a negative credit score when used carelessly. Understanding all the processes required before applying for your first credit card is essential.
This article will explore the best credit cards for beginners, how to apply for a credit card the first time and common mistakes you could make in your application process.
Credit Cards Appropriate for Beginners
Credit Cards for Students
Student credit cards function like that of standard credit cards. They typically offer a few components that cater to the financial needs of students, such as student-only rewards for entertainment, streaming services, food delivery or travel expenses.
Secured Credit Cards
Secured credit cards are a great choice for individuals with minimal or no credit history. To apply for this card, you will submit a deposit to start an account. A deposit usually serves as collateral for your card if you default on any payment.
How to Apply For Your First Credit Card
Applying for a credit card for the first time can be unsettling, but if you follow the right steps, it becomes a straightforward process.
Here are a few tips on how to apply for your first credit card:
Explore Different Credit Card Types
There are different kinds of credit cards you can choose from. Before applying for a credit card, examine cards compatible with your credit score. You can request a student credit card or secured card like Capital One to grow your credit score if you are a new credit card user. It’s necessary to evaluate the card benefits of providers until you choose a few that best suit your needs, as each offers unique rewards to its customers.
Assign a Budget
Establish a financial plan or approach to avoid spending money beyond what you can afford to pay off by the due date. By doing this, you can avoid paying interest and minimize the risk of having large balances or late payments, which could lower your credit score. Establish a monthly spending restriction for an easy method to stick to your spending plan.
Check for Costs
Before applying for a credit card, check out different options and compare yearly fees, annual percentage rates and other characteristics to discover the best match for you. Several credit card issuers have an amount they charge credit cardholders yearly. Federal law requires credit card issuers to make some conditions, such as interest charges and cost, easily accessible before you apply.
Pay Off Debts
Before obtaining a credit card, ensure you settle off all debts, particularly credit card debt. Start with the outstanding payments that have the highest interest rates. Although having debt would not make you ineligible for a credit card, too much debt can make credit card providers reconsider accepting your application.
Explore Credit Card Reward Options
Two main reward credit card types are available: cash back and travel reward credit cards. You can opt for any of these two cards to enjoy advantages, including free flights, shopping vouchers and hotel stays. The purpose of these cards is to motivate users to make purchases. When you request a reward credit card, you should examine the points you could receive on qualified purchases and see what premium benefits you can exchange those points for.
Fill Out the Credit Card Application
Applying for a credit card requires disclosing financial and private details. Here is some of the information your card issuers could ask for:
- Full name.
- Date of birth.
- Residence.
- Yearly earnings.
- Email address.
- Social Security number (SSN).
- Individual Taxpayer Identification Number (ITIN).
Review Credit Card Terms and Cardholder Agreements
After being accepted, thoroughly read your credit card terms and conditions and the cardholder agreements. Ensure that you know how to use and validate your card. You should also check how to make payments, invoice your information and understand the necessary details regarding your fees and interest.
Consider Obtaining Prior Authorization
Increasing your chances of gaining proper authorization for your credit card application can also be achieved through pre-approval for a card. A pre-approval presents you as a good prospect for a credit card after being pre-screened by a lender based on your payment history and credit reports. Additionally, a pre-approval prevents pointless inquiries on your credit report, which could reflect on your credit record.
Requirements to Get Your First Credit Card
Several factors can affect your credit card eligibility. You must be 18 years old and above to ensure your application is approved. You are also required to be self-employed or salaried. Your annual income is a vital criterion for credit card authorization. Many credit card issuers will require you to provide documentation of your ability to make payments. If you cannot do so, your application may be denied.
Mistakes to Watch Out For When Getting Your First Credit Card
Getting your credit card for the first time can be an exciting experience. However, there are a few common errors you should avoid to prevent any future regrets:
- Don’t forget to read or ignore the credit card disclosure agreement.
- Don’t fail to develop a budget plan and a credit card payment strategy.
- Don’t neglect to compare credit card costs when applying.
- Don’t select the wrong credit card for your needs and financial goals.
- Don’t fail to understand the impact of your first credit card on your credit score.
Final Verdict
Applying for a credit card is easy when you follow the right steps and processes. These cards are useful resources for anyone trying to build their credit score and serve as a great emergency fund backup. You can get your credit card approved faster when you meet the qualifications of the credit card issuer. Credit cards are an easy way to make payments, and they offer convenience, flexibility and even reward points if you use them responsibly.
Learn about ways you can put an end to credit card debt.