Both starter and typical cards function the same way, apart from a few differences. However, if you have never owned a credit card before, you are probably wondering how this whole thing works. Basically, you “borrow” money from a financial institution to buy gas, make purchases, travel, and then pay at least a percentage of the money after a given period. 

The remaining amount is what accrues interest. However, this can be avoided by paying back your credit card in full and on time. If you don’t know what credit cards are or what they are all about, it is important to do ample research before deciding to open an account.

As a new credit card user, you may be subject to specific fees such as deposit fees. This is because these financial institutions are taking a risk by giving credit to a person who has no track record of carefully managing a credit card. To learn more about this crediting method, continue reading below.

credit card

Do You Have To Get A Credit Card?

Well, there is no right or wrong here. You only have to consider the reasons why you are getting one in the first place. They have advantages and their drawbacks, go through each and make a choice. However, that being said, if you choose not to open a credit card, you will need to find other ways to establish credit. 

Pros Of Getting A Credit Card

  • You can earn rewards
  • You will have access to emergency funds
  • You learn how to use and manage credit
  • Access to finances to make large purchases
  • Opportunity to establish a credit history

Cons Of Getting A Credit Card

  • Can come with expensive fees
  • May end up paying interest
  • You will be tempted to live beyond your means
  • It is easier to fall into debt

Building Your Credit

Once you get a credit card, it is essential to have good credit and pay attention to the following: your amount of debt, kind of credit, length of credit history, and your history for requesting credit. If you want to have a clean credit history, you shouldn’t ignore any of the above components. However, using your card responsibly and regularly is a great way to build credit. 

Tips For Picking Your First Credit Card

Depending on what you are looking for in a credit card, here are some tips to help you with the process of selecting a credit card.

  • Consider a card that comes with zero annual fees
  • Consider a card with low APR
  • Consider a student or secured card

As you use your credit card, don’t be too excited and forget to pay back the loaned money or go beyond your limit. This will only but lead you into debt. If your card has rewards, always remember to redeem them. Many people forget to use their rewards.

Bottom Line

When you are new to the world of credit cards, it is easy to miss crucial factors. As such, always set a reminder for paying your bill. There are so many budgeting apps available online, make use of them to ensure you don’t overspend. Also, you must keep tabs with your credit score to see how you are spending and where you are standing.