Written by Charlotte Wood (last updated February 21, 2009)
From your 18th birthday and onward, you constantly receive credit card offers in the mail. You get them all the time and usually I just throw them away, but if you're looking into applying for a credit card then it might be worth it to investigate some of those offers. The credit card industry is a tricky business and you need to approach this endeavor with shrewdness and caution. All credit cards aren't bad, but you need to make sure you get the credit card that works best for you.
Like with most other things financial, you need to do your homework when choosing a credit card and make sure you know your needs so you can find the credit card that's best suited for you. Something to ask yourself first is: what will I be using my credit for? If you plan on paying your full bill every month, look for something that doesn't have an annual fee and a long grace period. If you want to use your card to make cash advances or you plan on carrying a balance, focus on finding a card with a low annual percentage rate (APR) and low fees for advances.
Make sure you understand what fees and rates are associated with your card. Some cards carry different APRs for purchases, advances, and other features. Some cards have tiered APRs, so the higher your balance, the higher your interest rate. If you choose a card with this plan, make sure you keep your balance low.
Whatever your goals in seeking out a credit card, make sure you understand the risks involved. Using a credit card introduces the risk of spending way more money than you have leading to potential high credit card debt. Always be aware of your credit limit and either find a card with a high credit limit or use a low limit to limit your own spending. Be aware of the various fees involved. There are fees for advances, going over the credit limit, late payments, bad checks, and your regular annual fee.
Many cards also come with various features like travel points, product warranties, and emergency insurance. If this is your first card, you probably don't need a card with these perks and should probably go for the regular, low fee, low risk credit card. You could even talk to your parents and see what they think about what would be best for your financial situation.
Credit cards can be a good way to build your credit and coach you in wise financial management. Do be careful however that you don't get into trouble and don't buy things you won't be able to pay off. Now that you know the things to look for you can go out and choose the right credit card for you!
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