6 Things To Have In Mind When Choosing Your First Credit Card

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Whenever we go outside we make sure there’s enough money in our pockets to last us the trip. However, everybody makes mistakes, resulting in miscalculations and a lack of funds. This is the exact reason why credit cards are so useful. No matter what our urgent need for more money ends up being we’ll be covered with one of these. Credit cards offer you a certain amount of credit that you can make use to make purchases, with the caveat that you have to pay back the loan in the future. Due to the way they operate, it’s possible to dip into these extra funds for any sudden expenses or important purchases you haven’t planned for. Requirements to get one include being 18, having a social security number, having a source of income, and positive credit history. All in all, rather simple requirements but there are some very neat tips you should know before getting your first credit card.

1. They require deposits

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While credit cards offer immediate loans during times of need they do require their users to prove their trustworthiness first. This is done by them asking for a deposit when you first open a card, as means of covering any credit that gets built up, preventing people from building up a loan and dipping on their credit card.

These cards are called secured credit cards, they are aimed at those who have very little credit history or don’t have one at all. If you are a younger user you’ll most likely be starting with one of these. Another way they differ from regular credit cards is by having their credit limit be equal to the deposit you’ve paid. Even if you aren’t a particularly frequent user of credit cards these cards can be very useful to build up your credit score.

2. Don’t be hesitant about using your card

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The idea of having to repay loans is something universally harrowing to anybody, causing us to stress out until money is repaid in full. However, when it comes to credit cards we shouldn’t be too worried about spending money it provides. While spending no money on the card will keep us out of any debts it doesn’t do much for our credit card score. The card will end up just sitting in our pocket seeing no use and result in our credit score stagnating just like it. There are certain benefits you get by using the card more often, which can end up saving you money in the long run. Check your credit card’s information online, it will help you understand how much money you should be spending with the card and how much is too much. Finding this information will provide you with maximum benefits without any of the downsides. Of course, no matter what these numbers end up being make sure to spend only as much as you can pay back reliably.

3. Unauthorized use and theft protection are accounted for

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The stress of forgetting our wallet somewhere or losing our card is indescribable. The possible monetary expenses this can lead to are our main point of concern but the compromise to our privacy is another troublesome area. Thankfully, credit cards offer 24-hour fraud protection and identity theft assistance. Any possible charges are covered by this service so your peace of mind can be guaranteed. There are some expenses you could be held accountable for but those won’t exceed 50 dollars.

However, there’s still some responsibility on the card owner’s shoulders and that’s to make routine checks of the charges made on your credit card. Even if the card is in your possession there may be some odd scam going on so confirm all expenses are yours is very important.

4. Don’t use up your whole credit limit

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Yes, it has been mentioned in previous points that you should use your card, however, that doesn’t mean you should expand the whole credit. The reason this is important is due to the fact it also impacts your credit score. Every credit card has a certain credit limit which determines how much you can loan through its services. Reaching this limit will usually adversely affect the opinion of the credit card issuer and loan givers at large. The amount of money you use in comparison to your limit is called the credit utilization rate. The limit can be increased over time but you should always utilize around one-third of the available funds, as this is the optimal way to get the most out of your card in both funds and credit score.

5. Credit card owners are eligible for rewards

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Apart from the base utility a credit card offers to its owner, some special offers and benefits come with the use of one. Make sure to check incentives and reward programs that available card issuers offer before picking a card as these additions can be extremely useful. These rewards can be anything from discounts, bonuses, cashback, and many more options depending on your card of choice. Checking how these benefits can be obtained and if that type of credit card use corresponds to the way you are using it is another important step.

If you want to revise the benefits and rewards offered by different credit cards make sure to visit creditcardkarma.com because a lot of available cards have been reviewed on there. Making sure to pick up the card you can get the most bang for your buck from is very important as it gives them additional utility.

6. Rethink canceling your card

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This one has to do with credit history as well. Canceling a credit card can negatively impact your credit score for a few reasons. The first reason is that it brings down the age of your account if it’s an old card. The second reason, and a more important one, is that it will decrease your overall credit limit. While the reduction of the limit itself isn’t that influential, especially if you aren’t utilizing it to a great extent, canceling a card will carry negative repercussions for your credit score.

Keep this in mind before even getting a card. If you plan to use it for a bit and then cancel it maybe this type of service isn’t necessary for you. Consider using simple loans instead if your need for funds is temporary to avoid possibly screwing up the credit score. Of course, there are cases where the credit card has been completely unused for years. In this case, it may even be beneficial to cut it as it doesn’t provide any benefits. Hopefully, the above tips have equipped you with the necessary knowledge to owning a credit card thus removing the need to eventually cancel it.

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