Getting your first credit card is exciting. Soon you will be among those countless people who are the part of the smarter world. The time is gone when wallets were bulky and fat due to too much currency stuffed in them. Things are more handy now. You do not need to carry a big bunch of currency to carry 10,000 Pound, it all can be encapsulated in one small, sleek credit card.
There is no doubt that with excitement you also need to keep a little caution, as you are new to the world of credit cards. There are dos and don’ts for handling every financial product and the credit cards are among the complicated ones.
Here are the few things that you should know before you get your first ever credit card.
Go for secured credit cards with security deposit if it is difficult to qualify
You know very well, to get a credit card you need to have a good credit rating. However, both the first time applicants and bad credit score applicants are not good for this. If you are among them, you can go for the secured credit cards by depositing some cash. Your credit limit will be equal to your cash deposit. For more limit, you need to deposit more. The word of caution here is – if you miss the repayments, you may lose the deposit money. While paying them on time helps construct a better rating and profile.
However, here, the other side of the coin should be come to show an important aspect. Sometimes despite many efforts, the bad credit scorer and people with no credit history fail to get credit card. In that case, your solution can be found in the specialised direct lending loan products.
There are some lenders that provide loans that also work as the tool to improve credit score and also create a credit profile. For instance – British-Lenders provides such loans, you take them with lower interest rates to facilitate easy repayments. By making timely payments of instalments, you can improve credit score. Those with no credit history can have a credit record.
The best credit cards with multiple perks are not for beginners
The first time applicants should not expect credit cards with big benefits. Longer 0% interest period, rewards and sign-up bonuses, etc. are for those with good or excellent credit scores. Also, those with longer credit histories, get such credit cards.
You need to start with the options with smaller limits however; it is not a bad thing. There are choices available that offer good rewards and charge no annual fee. You just need to invest time and effort. Some of the options in this case can be – student credit card, credit card for fair credit scorers, secured credit card.
Credit card can build as well as ruin your credit rating
One of the prime reasons of taking credit card is to boost credit score. However, if you make delayed payments or miss them, the purpose can remain unsolved. In fact, it can cause a severe degrade in credit score performance. It is better to stay on your toes and avoid any mistake.
Never forget to pay your dues on time. Otherwise, get ready to encounter the consequences that are not in your favour. The interest rates of credit cards are always high, you miss one instalment and next month it will become double. You should not let your first experience of credit card go wrong due to your own fault.
You can completely avoid to pay the interest
Financial life works on discipline, if you stay on track, it gives beautiful rewards. Same is the case with the credit cards, if you pay the monthly bill in full, you do not need to pay interest. Until the next due date, no interest will accumulate. Pay timely every month and you do not need to pay the interest.
Those who fail to follow the rule of timely payments get stuck in the quicksand of ever increasing interest rates. Embrace patience and punctuality and your credit card can be as light as it looks.
Pay more than minimum
Once you get the card, you will frequently see a notification asking you to pay a minimum amount on due. This may sound friendly to you but this is not advisable. When you pay a minimum amount, that money is equivalent to only the interest of the last month and fee (if any applicable). In short, while paying the least amount, you are paying a tiny part of the actual current credit card debt. The best thing is to avoid the minimum payment habit and pay the actual due amount completely.
The above things should never go unnoticed as you really cannot afford mistakes in your first credit card. Better to follow the required precautions and keep things smooth.