Excellent! You are finally entering the world of financial growth. When we are young our financial needs are few and mostly taken care off. As we gain independence we find that often we don’t have enough money but are needs have grown. It is then that we consider obtaining credit from people outside our friend and family circle. That’s when you need a credit card.
There are several offers in the market and a lot of them offer very good deals. Here are some pointers on how you should go about when you are faced with that sublime question – I need a Credit Card, what should I do?
Let’s explain the Credit Process step by step.
Who gives Credit Cards? Some of the common providers of credit are:
How do I go about obtaining credit?
There are a couple of ways, the simplest way when you do need a credit card is to apply online to one of the many companies offering credit cards like Visa, Chase, Discover etc.
Another way is to approach your local bank where you may be having deposits. This is an excellent way to learn about how the credit system works. Your bank officer will guide you how you should go about things and will provide useful insights about what is the best card suited for you.
What are the different types of Credit Cards?
There are various types of credit cards available. Some of the common ones are:
Gas cards. These offer you points every time you fill gas. These points offer rewards later on.
Departmental store credit cards. Various department stores have there own credit cards where they give you great deals. The idea is that they want you to buy from them as much as possible and there are various discounts and schemes that you can avail.
0% Apr cards – these are cards that companies offer with 0% interest rates. However these offers are for a limited period only.
Air miles credit cards. These are mostly for those who travel frequently. You collect Air miles every time you use the card either for flying or at partner network of stores. This enables you to gain free flights or discounts at hotels, restaurants etc.
Business credit cards. These are for people running a business who need bridge financing.
Prepaid credit cards. These are basically debit cards. They offer you the convenience of not having to carry money all the time.
Secured credit cards. These are credit cards that you get by pledging an asset of yours like a vehicle or something else. They enable the lenders to recover your dues in case you default by confiscating your asset.
Cash back cards – These offer you cash back on your purchases – sometimes almost as high as 5%. Now isn’t that cool.
Words to the wise:
Be responsible: Do not overextend yourself. Stay much within the credit limit. It is very easy to run up debt that you find difficult to pay off.
Always make your payments well within the grace period
Don’t go around obtaining multiple credit cards all at once
Look for credit cards that offer you maximum rewards and schemes
Start out with a gas card which will help you learn how the system actually works.
Always look for credit cards that offer you the lowest interest rates over long term and not just for short term incentives. This is the single most important criteria that you should use when selecting a card.
Credit cards bring a lot of freedom and allow you to buy things even if you are short of funds at a particular time and that is indeed a relief. However do be responsible and pay back your dues timely, as ultimately the people who lend you money are looking to earn money too. It would not be fair to default on your payments. Legally you are responsible and that should keep you in check, however do take it as a moral responsibility too. After all wouldn’t you have paid back a friend in time if he had lent you money?
I hope this answers most of your questions of what you should do when you need a credit card.