At some point in your life, you’ll likely start thinking about taking out your first credit card
Pretty much everyone gets there sooner or later. A credit card is a great tool that can save you a lot of time, and in some cases even money – but it has to be used responsibly, and with a full understanding of the implications behind it.
Because if you’re not careful, a credit card can cause you a lot of harm in the long run. But in the end, it boils down to how responsible you are and whether you have the determination to go through with the deal until the end.
The basic idea of a credit card is not too different from that of a loan. You pay with the card (or take money out of it through ATMs in some cases), and instead of having that money automatically withdrawn from a checking account, it piles up on a credit line. At the end of the month, you get a bill for everything you’ve bought with your credit card. If you can’t pay that bill on time, you get charged interest.
Pretty much any online shopping site accepts the popular types of credit cards, and you’ll often be able to pay without any extra fees that way
What makes credit cards different from a typical loan is the interest rate. Loans are meant to be repaid over periods of months, sometimes even years. On the other hand, a credit card is supposed to be paid off much more quickly, and carries harsher penalties for those who don’t.
Not everyone needs a credit card, but most people nowadays can definitely benefit from one in various ways. It’s a great tool for online shoppers, for example. For example, paying with PayPal will often incur a $1-2 extra charge in most cases. Your bank might charge you for direct debit purchases as well.
It’s not hard to find all sorts of horror stories of this type, and some people tend to have a suspicious attitude towards credit cards because of that
A credit card is also good for those cases where you know you will eventually be able to afford something, but you can’t buy it right now and yet you want or need to. Keep in mind that you should be very realistic with yourself regarding your ability to pay off the balance on that credit card eventually though. If you don’t, the consequences can be severe, especially for a bigger purchase.
To get a credit card, start by talking to your bank. They should have some deals readily available for their customers. Even better, you won’t have to go through any approval periods or other similar annoyances, because the bank already knows exactly how much you’re earning, spending, and saving. They will be able to give you a good deal designed to match your current situation as closely as possible.
If that doesn’t satisfy you, you can try an external card issuer. These might sometimes be able to give you better deals than your bank, but this usually depends on catching a good deal at the right time. Pay attention to the internet and follow some sites that list such promotions to maximize your chances.
Sometimes, a credit card is the wrong solution to a problem you might be having. If you just need a single “burst” of money, consider the option of taking out a loan instead of committing yourself to a credit card. Remember that a credit card comes with a long-term contract and has various implications on your finances, which a loan doesn’t.