3 Tips Before You Apply for Your First Credit Card

3 Tips Before You Apply for Your First Credit Card
3 Tips Before You Apply for Your First Credit Card

Cashback, rewards, bonuses, insurance and perks. That about sums up why credit cards have the edge over debit. Not so fast, though. Because that’s not the whole story either.

Sure, credit cards open up doors to things you want. Right now. But part of adulting is responsible spending.

Because credit cards can also open up doors to years of financial struggle – if you’re not careful.

#1. Only spend what you can back pay in full

Yep, whatever you spend on your credit card is borrowed money, which they’ll start collecting back in 30 days. If you can’t pay back in FULL within that timeframe, you pay an interest rate of around 20% (or higher) which will compound every month unless you start chipping away at it.

#2. Do your homework

Not just in class. In real life too. Most of all, in real life.

While you’re at school (and your income is low), cards with no annual fee are probably your best bet.

Here’s the thing. Even if you apply for the best no-fee credit card, there are no guarantees you’ll be approved. Most financial institutions have a minimum income requirement as part of the criteria they assess when deciding whether they support you.

Keeping that in mind, they have specific cards geared towards students (or those just starting).

#3. Stick to one card for now

Think of this as a test. How well you do managing this one card for some time (at least a year) will give you an idea about your spending and payment habits.

If your monthly payment goes towards your balance (never interest), you’re doing great.

What if you find that you’re overspending? Freeze it (literally in a block of ice) until that balance is paid in full.