The use of credit cards first started in the 1920s. Oil companies would issue them to automobile owners to encourage brand loyalty.
Fast forward to today and they’ve come a ubiquitous part of consumer culture. According to the U.S. Census Bureau, more than 250 million adults carry a credit card.
Thinking of applying for one? Want to learn more about the credit card process? If so, you’re on the right page. We’ll be going over all that you need to know in our guide below.
Keep reading to learn more!
Table of Contents
Benefits of Having a Credit Card
Credit cards offer many advantages over other payment methods. For one thing, they give you the opportunity to build credit.
Not only that, but many allow you to earn rewards for the purchases you make. For example, some cards may offer miles or points that can be used toward hotel rooms or flights.
On top of that, they offer fraud protection. You won’t be responsible for any fraudulent charges as long as you report the unauthorized charges in a timely manner.
For those who plan on applying, here’s a payroll stub template to help you get your first credit card.
4 Things to Know Before Getting Your First Credit Card
Understanding the basics will allow you to build good credit more quickly. Here’s what you need to know.
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Check the Rates and Fees Before Applying
Credit card issuers are required by law to publicly disclose certain terms including interest rates and fees. Make sure that you read over them.
For example, many cards will charge an annual fee. Foreign transaction fees are also a thing if you make purchases outside the United States.
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Consider Paying More Than the Minimum
The minimum payment due will be displayed on your credit card statement. While there’s nothing wrong with paying the smallest amount possible, it generally means that you’ll be paying much more later.
For one thing, the minimum typically includes interests and fees. In other words, you won’t be covering much of the underlying balance.
For this reason, we highly recommend that you pay more than the minimum.
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Always Pay On Time
Missing your payments can get expensive quickly. Depending on how late they are, you could face late fees, which can cost well over $20.
Not only that, but they can hurt your credit if your payment is more than 30 days late.
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Don’t Get Too Close To Your Limit
Don’t get too close to your limit—it can sink your credit score. Generally speaking, the lower your credit utilization ratio is, the better.
Ideally, you want to try and use less than 30% of your limit.
Understanding the Credit Card Process
There are several things that you want to consider when it comes to the credit card process. Remember, not all cards are the same; that’s why it’s so important to do your research before applying.
For more articles like this, be sure to check out the rest of our blog today!