Getting a new credit card is one way that you can build credit, repair credit, improve credit, start credit, and get rewards for shopping. There are many reasons why you should get a new credit card!
When you plan on getting a new credit card, keep the following tips in mind to make it a smart money move:
Getting A New Credit Card Do’s…
- Check your credit score. Knowing what your credit score is before you apply for a credit card is a great idea. Some credit cards are only offered to people with a certain credit score so it’s best to know what kinds of credit cards you can and can not get with your score. You can check your credit score for FREE with Credit Sesame.
- Choose a credit card based on your credit. For example, most credit card companies offer credit cards for certain types of credit users. If you know you have average credit then apply for the average credit option. You won’t get as good of a deal but you will get approved and get the chance to improve your credit score over time.
- Read reviews of credit cards. When you need to get a new credit card, read reviews of people who use and promote the cards. You’ll find out what makes a card great and why it might be a good fit for you.
- Choose a card based on your lifestyle. Getting a new credit card should be largely based on your lifestyle and spending habits. If you like to travel consider a travel rewards card to get free trips and cruises from signing up. If you eat at a lot of restaurants get a card that offers extra rewards for purchases on dining out.
- Consider your options with secured credit cards. If you have no credit history, it’s short, or you are rebuilding credit then your credit card options will be limited. You can start off with a secured credit card in these situations. It’s a great tool to start the credit building process. You’ll have a card backed by a security deposit which serves as a buffer against defaulting, protecting you and the credit card company.
- Read the fine print and know your rights. When you sign up to get a new credit card make sure you know the terms and conditions before you apply. Many credit cards will charge crazy rates if you miss a payment so know what will happen before you get into that situation.
Getting A New Credit Card Don’ts…
- Apply for any offer that comes along. You’ll get tons of offers for credit cards in the mail once credit card companies know you are looking. Don’t just apply for any credit card that comes along. You should instead go online and apply for the credit card that best matches your needs.
- Skip payments or forget about your card. Every time you miss a payment you will be charged a late fee. You’ll also do damage to your credit score, which will affect your ability to get other loans like a mortgage. You can set up automatic credit card payments or email alerts to remind you of your payment. Just don’t miss it or forget it!
- Carry a balance month to month. Part of using credit cards responsibly is paying off your balance every month. This helps you stay on top of your finances and it helps you avoid any interest payments to the credit card company. This is part of using credit cards responsibly. If you do find yourself getting into a whole because of an emergency expense then simply pay more than the minimum payment each month to reduce the balance. Pay as much as you can if you have a balance, just never the minimum!
- Apply for lots of credit cards at once. While it’s tempting to go out and get a ton of new cards all at once this isn’t a great idea for your credit score. Multiple hard inquiries from all those credit card applications will lower your credit score and get you denied for credit cards and other loans that you might really want. Apply for one card at a time and then wait a while before getting a new credit card.
- Max out your credit cards. This is a horrible thing to do to yourself and to your credit. Never max out your credit card utilization, especially when you first get a credit card. It will lower your credit score and make it harder for you to pay off that balance. Instead, spend responsibly and slowly with a new credit card. Do not treat it like free money – you will have to repay that balance!
These are a few of the critical do’s and don’ts of getting a new credit card, no matter what the credit card. Remember to use credit cards responsibly and you will reap the financial benefits of doing so!
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