If you’re wondering if you are ready for to get a credit card, there are many factors you should consider before opening one. Some people prefer to stick to cash-only purchases to avoid going into debt. On the other hand, some use their credit card whenever possible.
It is important to weigh the pros and cons of credit cards before opening one. If you want to know if you’re ready to open a credit card or not, be sure to keep reading.
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Make Sure You Meet the Requirements
To qualify for a credit card, you must be at least 21 years old or 18 if you have your own verifiable income.
If you don’t have an income, you can apply with a co-signer, but only a few credit card companies allow this. In addition, you could also become an authorized user on another person’s account. However, with both of these methods, the other person’s credit could be impacted if you can’t pay back your credit card. Because of this, it is important to make sure the co-signer understands the risks.
Decide If You’re Willing to Pay a Deposit
A secured credit card is a great way to start building credit if you don’t have any credit history. With a secured credit card, you put down a cash deposit, which acts as your credit line. This protects the credit card issuer if you don’t pay your bill.
Pros and Cons of Credit Cards
Pros
- You’ll build credit history: Having a strong credit track is important to access other lending products you might need in the future. When you pay your credit card bill on time each month, that’ll show show lenders that you can responsibly manage money and make payments on time.
- You’ll be shielded from fraud liability: Data breaches happen rather frequently, so it’s important to protect your identity and financial accounts. If your account information is stolen, credit cards come with less fraud liability and risk than debit cards.
- You don’t have to worry about cash when traveling: Credit cards are more convenient and safer than carrying cash in your wallet when traveling or making a big purchase.
- You can earn cash back or travel rewards: A major perk when you use credit cards is that you can earn rewards when you buy your everyday purchases. For instance, you might be able to earn cashback or points to receive statement credits or free airline flights.
Cons
- Can be tempted to overspend: If you don’t have responsible spending habits, you might end up with a balance that’s beyond your budget. You should only spend what you know you’ll be able to pay off fully by the due date.
- You could feel more overwhelmed by bills: You might have many other bills such as rent, car loans, student loans, utilities, and more, so adding a credit card bill on top of that might be overwhelming.
- May not be ready: If you don’t know much about credit scores and other key credit concepts, you might want to wait to use credit cards until you’re ready. Improper credit usage could put your credit score at risk.
Author’s Verdict
A credit card is a lot of responsibility, so it’s important that you understand all the pros and cons to determine if you are ready for one. If you do decide to open up a credit card, make sure you pay your full statement balance on time each month. In addition, you can check out the best credit card promotions here.
In addition, we have a list of bank promotions to get some extra cash in your pockets today. You may also want to check out savings accounts if you want to get started on saving up money.
