Up to a certain age, our parents are those that take care of our needs, and we only need to obey the orders. After some time, we become more independent, and we need to take care of ourselves. Later on, family comes, and we have tons of responsibilities, just like our parents did.
At what point do we make this transition, and when is it time to make the switch? When are we ready to get our first credit card, and what does it mean as part of our responsibilities? Is it when we first go to college, and we get a student loan or is it later in life when we first get a job?
These questions never have one answer to fit everyone. It’s highly individual, and everyone should think about this by themselves. One thing is the same for everyone, though, and that is the fact that with the credit card comes a ton of responsibilities that you need to mind.
In this article, we’re talking more about when is it time to apply for your first credit, what it means, and what you need to mind when doing it. How serious this move is, what may go wrong, and what the things that will make you eligible for one are. Keep going to see what we have prepared.
Get one when you have great income
There are lots of cases in which students own a student loan and ask for a credit card. This is a disastrous decision for everyone in this situation because the credit card itself is a loan in some way. When you get a loan over a loan, it becomes extremely difficult to pay it off.
This is why you should wait sometime before you get a traditional credit card when you’re younger, and especially when you’re already in debt. Don’t force yourself to get one and live a lavish life if your income is nonexistent and you’re still educating yourself.
When you get a job and start earning, then it’s time to apply for one. If you still own the student loan we mentioned, you’ll pay it off through your income. However, you won’t spend every cent you earn on the loan, which means you can easily get one and spend some money from it too.
Let’s say that you earn $4,000, and you pay off $500 for your student loan. It means you still have $3,500 to spend on a thing you want and need. If you get a credit card and place something on it, you can easily repay the issues of the card through your monthly salary.
Make sure your credit score is perfect
Before getting anything, make sure your credit score is flawless. The reason behind this is that you might not get your application approved if your credit score is too poor. On the other hand, a bad credit score and getting your credit card approved to go with a terrible interest rate by rule.
The card issuer must be sure that you’ll be able to repay the debt. When you put something on the card, you’re just as good as getting a loan from a bank. You’ll need to return the money sooner or later. If you’re not eligible to return the finds, then the card issuer is going to lose.
This is why they always try to find a way to be sure that you’re not going to miss the payments. Even if you’re not the best person for getting a card, they’ll make sure you have higher interest so that they get enough before you stop paying back.
If you’re thinking about getting one with high-interest rates, be sure that you’re not making the right decision. Instead, you need to make a debt refinancing and find a way to lower your debt because this is going to improve your credit score and you’ll get better terms on your new credit card.
Don’t get one if you’re not eligible for a great interest rate
As we just said, the interest rate is highly important for the credit card owner. If you’re offered one with a high-interest rate, you shouldn’t accept it. The average interest rate in 2021 was just below 16%, which is a tremendously high amount for a loan. Check this link if you want to know more about these stats.
Imagine getting a loan with this interest rate, you’ll lose a ton of money. However, the credit card funds are much lower, so the effects are not as huge. Still, if you get a card with an interest rate over 20%, then you can be sure that you’ll lose a ton of money on it.
Some credit card issuers provide much lower interest rates. Usually, those with a flawless credit score are going to get around 10%, and those that have a lot of income on their card can even go below 10%. When you’re getting a new one, make sure that you’re not ripped off, and you pay around the average.
Look at the insurance and make sure it’s flawless
Every credit card comes with insurance. In most cases, users are not even aware of this, but they are paying from it from the card. When you’re getting one, ask the issuer what you’re getting as insurance. The best one will protect a lot of segments in your life, and you may even get car insurance through it.
The most important insurance is the one that is supposed to protect the funds in the account. If a hacker is trying to steal from you and manages to do so, then the insurance company will cover the loss. This is crucial because there are billions of dollars every year lost due to hackers.
If you can’t use it wisely, don’t get one
Credit cards are made for people that are going to use them wisely. Some users literally go to rehab when they can’t stop spending impulsively because the credit card can cover nearly anything they look at. That means you need to be sure that you’re going to be safe by having one.
If you’re spending more than you earn, then you’re not the best person to apply for one. You want something that will protect your earnings, and the credit card is not that piece of plastic. Only apply for one when you’re certain that you can control your emotions and you’re not going to spend money on things you don’t really need.
Conclusion
These are some of the most essential points that you must know before applying for a kredittkort or a credit card. These points above are going to show you what you need to address before deciding and what you need to be aware of when applying.
If your income is not as great as it should be, then the credit card will only help you make your credit score worse. You’ll struggle to get the borrowed amount back, and the interest rate will eat all your money coming in the form of income, so be smart and get one when you’re ready.