1. Make sure you can afford it
Before applying for a credit card, you should know how you are going to use it. Your first card should be used to build credit, and therefore should only be used on things that can be paid off every month in full. Lay out a budget ahead of time, and know what kind of expenses you are going to be charging. The best way to start using a credit card is to charge a small, fixed amount like a cell-phone bill, and then pay off the amount every month.
2. Know the interest rate
If you don’t pay your balance off in full, you will incur interest. No two cards are exactly the same and interest rates can range anywhere from 8-25%. Cards with rewards programs tend to have high interest rates, while ones offered through a credit union are usually lower.
3. Research options
Which credit card works best for you? Many first-time appliers go through a trusted financial institution, but that doesn’t mean it’s a bad idea to look at all options. A first time credit card holder may want to have a card with a low-interest rate, which means reward-based cards would not be ideal. If you often travel abroad, search for a card with low international fees. If you would prefer not to mail in a bill every month, look into a card that has an easy and convenient online bill payment system.
4. Understand how to build credit
If you’re getting a credit card, that probably means you are looking at establishing credit. A low-interest credit card is one of the best ways to start building credit and preparing for the future. In order to do so, you must pay your bill, in full, every month. Not paying your balance will actually hurt your score and make it more difficult to borrow money in the future for things such as mortgages and car loans.