Do I Need A Credit Card?
Are you ready for a credit card? Do you know how much you can spend? What about a good APR rate? This checklist will help you know more about why credit cards are important and if you should have one.
Sixty years ago, a man walks into the Major Cabin Grill, sits down with his wife and clients, and orders his favorite meal. The server walks over and brings the bill, but as he reaches into his pocket, he realizes he forgot his wallet.
Sounds like the plot to the everyday nightmare, doesn’t it?
As Frank McNamara’s wife paid for their meal, he got the idea for a card which can help people pay when they don’t have cash on them. Thus, the first credit card was born.
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But, what once was a system to save the day, has now become the system we can come to regret; which is why anyone should know the facts before they start to get a credit card.
Why do you need a credit card?
Today, if you want to get a house, a car, or even a phone, you need credit in order to do so. The credit system lets companies and banks know that you are responsible enough to pay your bills on time. So later on you can have more credit to buy the more expensive things like a car or a house.
Companies like Discover, American Express, and Visa are more than happy to help you by giving you your very own card. They’ll even put your name on it!
If you are just starting off, you need to get a student credit card and only pay for small things like gas or groceries; money which you have already. This helps build your credit score and allows you to have a phone in your name instead of your parents.
Look for cards with the lowest APR or annual percentage rating. Yes, credit cards cost money. You are essentially paying them to use your money. But it works out in the end. Do not get any card with a rating higher than 25%, but 15% is the average best.
How do you plan on paying for it?
The credit card was created to help the user spend money they don’t have on them. One of the biggest problems with credit cards is spending money they don’t have. So the second question they must ask themselves is “how do I plan on paying for the credit card?”
You need to have two things before you use any type of credit.
#1. You need to have a job. A steady income is a must!
#2 You need to have the money before you spend it. Too many people spend money before they have it and end up in the never ending cycle that is credit card debt.
Don’t borrow to pay! Don’t be fooled with the idea that you can get money to pay off money. This is when the credit card cycle begins. If you have to many cards, start with the biggest APR percentage.
What type of card is it?
There are essentially two type of cards. A credit card is where you charge an X amount of money through a third party company, like Discover or American Express, and then go you go to that company and pay them instead of the second party, like a department store.
While a prepaid card is when the money is already placed on the card. But remember, only credit cards are able to help with your credit score. A prepaid card is there to help those who don’t need a credit card or who are too young to have one.