Credit cards are part of most people’s financial life. They make shopping easy to keep track of. But there is a fine line between how much cash you have and how much you can actually spend. At the age of 18, when one becomes a legal adult and qualifies for a credit card – instead of applying with several applications and waiting to see which bank will approve you first, focus on a few companies that have a reputation for providing cards to first-time holders.
Don’t be lured to apply for a preferred card just because of the attractive perks it comes with. Always read about the hidden charges and interest rates. However, being the right age does not mean you’re ready for a credit card. It takes someone responsible and diligent, to charge only what you can afford every month without being notified with a letter to pay. Once your good credit is broken it will be difficult to get out of debt and back on track.
To help, we have listed a guide on all you need to know on how to get your first credit card:
Understand the details
Receiving authorization for your first credit card can be difficult, especially if you’re jobless and under the age of 21. The Federal Laws require adolescents to have a verifiable income and a co-signer before they can receive a credit card. If you are jobless or with an insufficient credit history, then it is best to find a relative or someone close to you who is willing to open a joint credit card.
Get a steady income
Having a job, whether part-time or full time will put you in a favorable position to get your first credit card. Credit card companies have to make sure that you can pay back your purchases before they approve your application. List multiple sources of income. Banks or credit card issuers like to see a steady source of income, so this means people with lower incomes or freelancers might have a tougher time. Make sure to report all your income. Applicants over 21 can list other sources like investments, spousal support or other retirement benefits.
Know where to apply
If you’re still in university, try to apply for a student credit card from a major credit card issuer. Be careful and make sure to check if the cards come with high annual fees and interest rates. Apply at your bank if you have an existing checking or savings account. An existing connection with your bank can improve your chances of getting your application approved and acquiring your first credit card. Online applications are also possible if you have a good track record. Learn about the benefits of the best chase credit cards online or visit an authorized representative who can assist you face to face and help you get your card approved.
When your lack of credit history prevents you from getting approved, try for a secured credit card. With this, you will need to make a cash deposit that can go against the credit limit of your account. The bank will use this as a security in case you can’t make your payments at the agreed time.
Set a moderate credit limit
Most credit card companies will provide an enumerated list of the credit history they require before the approval of your credit card application. But look for credit cards that accept moderate or no credit. Applying for cards that are aimed at your specific credit history improves your chances of approval.
Look for a low-interest rate
Your first credit card will more than likely offer a low credit score. Find out exactly the percentage of interest you will be charged on the balance you don’t pay off each month. A lower rate will matter if you need to carry over a balance. Ideally, it is always best to spend what you can afford.
Ask a relative or a parent who is willing to help you get your first credit card by cosigning with you on your application. Be responsible and abide by the credit card terms. Also, be truthful to your cosigner, and make sure that you are responsible for making payments on time each month. When you have shown that you are consistent, close the joint account and try applying again, this time on your own.
Don’t lose hope
Don’t get upset if you’re denied for the first credit card that you apply for. It can happen to anyone, even to people with stable credit histories. After receiving the notice, it may be wise to read why you were denied. This information will be helpful in future applications.
Skip the annual fees in the meantime
Don’t complicate your first-time credit card with annual fees in exchange for attractive perks. It may offer points and benefits but paying extra for your card in return for these bonuses will just complicate things. Keep it simple since it is your first time.
No to shopping cards
Stay clear of retail cards issued by department stores. Invariably they always have high-interest rates. Stores solicit your business and the bank works out the details with them, usually at a higher interest rate.