Picking up a credit card is an important step on the road to independence, as it lets you start to build a solid credit history, and also means you’ve got a bit more control over your finances, so long as you manage it correctly.
The problem is that newcomers are easily flummoxed with so many different credit cards to choose between. This decision becomes easier when you know what perks to keep in mind, so here’s a quick guide to get you started.
Low Interest Rates for Longer-Term Savings
When you’re choosing your first credit card, it’s crucial to consider the interest rate first and foremost. The lower the APR (Annual Percentage Rate) on a card, the less money you’ll have to pay in interest over time, which can be especially useful if you plan on carrying a balance or making large purchases with your new card. And if you’re already into making savings when you spend, this should be a no-brainer.
Keep an eye out for offers that include 0% introductory rates and cards that offer low long-term APRs. Remember that even small differences in percentage points on interest rates mean big savings when compounded over time.
Understanding Balance Transfer Fees
If you want to transfer the balance of another credit card over to a new account, this can come at a price. So while if you’re starting from scratch, this might not be a priority, it’s still worth thinking about because your needs might change over time.
Many cards offer 0% introductory rates on balance transfers, which can help you save money if you have existing debt. However, there may also be fees associated with these types of transactions, so read all the fine print before signing up for any offers.
If possible, opt for cards without transfer fees, or ones that let you waive them after certain periods of time in order to get even more value out of the deal. That way when buying gifts or grabbing essentials, you’ll know your card is on your side, rather than being a financial burden.
Chasing Cash Back Rewards
Another bonus that can be attached to compelling credit card offers is the promise of cash back based on the purchases you make. Cashback rewards can come in the form of statement credits or even actual physical checks, so you can decide which type best fits into your budget and lifestyle.
Make sure to pay attention to any caps on how much you can earn each month, quarter or year so that you aren’t losing out here.
Taking Advantage of Points Programs
In addition to offering cash back, certain credit card companies have a points-based program for giving benefits and perks to their customers.
This usually involves awarding points according to how you spend your money. So you might get points for making purchases from particular retailers, or eating out at a specific chain of restaurants.
Once again, your own lifestyle and preferences need to be considered here. If you’re loyal to a brand featured on the points program from a particular credit card provider, it could help seal the deal over any of its rivals.
Accessing Convenient Digital Payments and Security Features
Convenience is key to a good credit card, but of course you don’t want this to come at the expense of your safety as a consumer.
The good news is that most of the mainstream cards today come with standard security features, such as fraud prevention tools, secure online payments and contactless tap-to-pay technology.
This can make it easier for you to manage your new account on the go, so be sure to check what kinds of digital benefits are included in each card before making a decision.
Once again, fees can rear their ugly heads here, so compare your options and ideally look for providers that let you use cards without having to fork out anything additional to stay safe and secure, whether you’re paying online or in-person.
Building Credit Faster with an Appropriate Limit Increase
The last thing to think about is how the right credit card can help build your credit score. Plenty of credit cards offer the potential for limit increases after a certain period of responsible use. This means that you’ll have more credit to play with, so long as you show that you’re good at managing your money.
When selecting a card, make sure to look at what kind of criteria must be met in order for you to qualify for higher limits. This can include things such as making consistent payments, or spending a certain amount each month. With these tips in mind, you’ll be well on your way towards building good credit faster!
Final Thoughts
The main thing to remember is that credit cards should be a tool to help you live your life and spend your money responsibly, not enable you to live beyond your means. So as well as getting a good deal, be sure to stick to good spending habits as well.
