5 Things To Consider Before Applying For A Credit Card
A credit card is a financial instrument that everyone might have at some point in life, but this is a responsibility that will not come easy. Here are some points to consider before getting one.
Do Not Be Greedy for the Short Term
Many different credit card companies will lure you with perks. You might start comparing what different perks one bank has that one does not and you might find yourself starting to weigh the benefits. You might start thinking of what could be the best deal and which option would allow you to get more deals and convenience later on.
A lot of credit cards look like best deals at first glance, but it is very important that you give the cons of each option more weight. There are a lot of charges and interest rates to consider which you might not understand yet until you are a year in into having your card. Before that happens, it is important to learn more about how this can affect you. A lot of times, those cards that offer short term benefits entirely erase that in the long run, so be wary of these.
Keep Spending Habits in Check
Even before the thought of having your own credit card comes to mind, one of the first few things that should be clarified is how you intend to use it. If you are that person who can pay off credit card debt every month without fail or if you anticipate carrying a balance from month to month, decide on your payment strategy early. Make it clear to yourself if you are going to use it to pay for everything or if you are just going to use it for emergencies or transactions that require a credit card.
If you are that type who pays the bill in full every month, then the interest rate does not really matter. The best option would be one with no annual fee and a longer grace period. If you plan on carrying on a balance, you will want the lowest price possible. There are many different cards for each and everyone, so take your time and sit down to consider what is really important to you.
The Second Year Will Cost You A Lot
Just like any other business, the first year is when credit card companies try to make you fall in love harder for them. This is when they give out fat bonuses and waive annual fees, but this benefit will not last very long. When you are officially within their grasp, this is when they start to rack up their rates and charges.
A credit card is more than just a device to enable you to buy things without really thinking about it. It is actually a huge responsibility. It can get really expensive if you do not know anything about what you are getting into.
Fees and Penalties
There is no limit to the number ways in which banks can make money off you and get you in more and more debt. There are a lot of charges and some common examples are those fees for transactions such as cash advances or balance orders. There are also some penalty charges for not paying your bill on time or going over your limit. In this case, your credit card does not get declined; you just get charged a fee.
This is why it is very important to look for cards with reasonable rates. This is a very crucial issue. While you might not intend to carry a balance, you should do what you can to stay away from those with exorbitant fees and high late fees even if other features seem to make up for it.
Credit Card Debt is No Small Matter
When you get a credit card, you will get a debt, so you really have to be sure that you know how to handle debt right before you actually think of getting one. It is a very romantic notion to finally be able to book your own trips and order things online. Companies will even attract you with signing bonuses. In reality, you should turn a blind eye to these promotions and focus on what really matters.While you might enjoy the benefits of a credit card, it is equally important to have the correct financial habits and discipline so you do not end up deep in debt.
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