Categorized | Credit Cards

How to Get a Credit Card: A Student’s Guide

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Are you looking to get your first credit card? Are you overwhelmed by the plethora of options out there and are not sure which you qualify for or how to build your credit? Signing up for your first credit card is not nearly as complicated as you may think, but there is some important information you need to know before getting started. The following student’s guide for how to get a credit card will give you a comprehensive overview of credit cards, tips for building your credit score and guidance for signing up for your first card.

About Credit Cards

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Overview

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Before you can learn how to get a credit card, you need to be well-versed about credit cards and how they work. In succinct terms, credit cards are credit lines you can use repeatedly to pay for the necessities of daily life. The line of credit is ongoing and is replenished repeatedly assuming you pay your balance on time every month.

Credit cards are an excellent way to pay for and budget expenses and build your credit score, if handled correctly. As a new user, you may not know credit cards are accompanied by very specific terms and requirements. It is important to know all the key terms associated with credit cards and the conditions that may apply before moving forward.

Terms To Know 

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There are quite a few terms you need to know when examining how to get a credit card. Do not worry, a quick review of these items and you will be an expert in no time. Many credit cards have an annual fee, which is the yearly cost associated with owning the card. Your credit card will always have a credit limit, namely the most you can charge with your card at any point.

The APR, or annual percentage rate, is the amount of interest you will owe if your balance is not paid in full every month. This rate is prone to variation, but you can get a general idea of what you will owe by taking the annual rate and dividing it over a 12-month period. As a rule of thumb, you always want to pay your balance on time so no interest is owed. However, in the event you had to carry over a small balance here and there, it is important to know what interest you will be expected to pay.

Your cash advance APR is the interest rate you will owe if you withdraw cash using your credit card. A cash advance APR will be higher than it would otherwise be for normal charges. A penalty APR is the interest charged if you make a payment after it is due or the payment is returned. Such fees should be avoided at all costs, as they can continue for months at a time or in an ongoing capacity, depending on your credit card company.

Some credit cards bear an introductory 0% interest-rate period, meaning you can have an overdue balance carried into the next month without owing interest. This is only for a specific period and is usually accompanied by terms and conditions unique to the credit card issuer.

There are late payment fees, which you will owe if you make your payment after the balance is due. Fees are usually upwards of $30 and beyond. Returned payment fees are amounts owed for payments that do not receive approval. These may also cost you $30 or more.

Depending on the issuer, your credit card company may charge you a foreign transaction fee for any international purchases. The amount varies but usually falls around 3% of the total purchase amount. If you take out a cash advance from your card, you will also owe a fee of around 3% to 5% of the total amount.

Finally, balance transfer fees are those which are transmitted from a previous credit card to a new one. You may wish to carry your balance from one card to the other, but you will be charged a fee of around 3% to 5% of the total amount.

Key Features  

In learning how to get a credit card, you might wish to look for cards that come with a sign-up bonus for new users. This feature usually mandates you spend a specific sum of money within a certain amount of time to enjoy the bonus amount. Quite a few credit cards have rewards programs that give you points, travel miles and cash back in congruence with purchases you make. You do not want to spend too much and have these rewards backfire on you. However, spending in moderation and building your rewards can be a great way to save money in the long run.

When learning how to get a credit card for the first time, be sure to sign up for alerts with your credit card issuer. In the event that a fraudulent purchase was made with your credit card, you can cancel it immediately to prevent further issues. Alerts are also a great way to remind yourself to make payments on time. Autopay will keep your balance paid in a timely manner too as it automatically withdraws the money from your account each month.

Tips for Building Credit

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Be An Authorized User  

If you are considering how to get a credit card, you need to know how to build excellent credit. One of the best ways to do this, especially for students, is to be an authorized user on one of your parent’s credit cards. You will need to speak with your parents to decide the option that works best for everyone, but this is a great way to learn how to build credit while still having accountability for expenditures.

If your parents have good credit, this will enhance your credit score and give you opportunities to sign up for better credit cards with lower fees and more rewards down the line. If you are under 21 years of age, you need to have a co-signer or provide verification of independent earnings, if you want a card in your name alone. If you are a student just learning how to get a credit card, becoming an authorized user on your parent’s card is a solid way to start.

Start Small

Another way to build good credit is to only use your card from time to time for smaller expenditures. This will enable you to spend only what you can afford, keep up your credit card in use and pay on time. You need to show account activity and responsible payments to build your credit so start small and work your way up.

Avoid Overspending

Always avoid overspending, especially as someone just learning how to get a credit card. While your sudden line of credit may seem like you have hit the jackpot, if payday comes and you cannot meet your balance owed, you will find yourself in trouble. Keep your spending moderate for the sake of your credit and to give you some wiggle room with any emergency costs.

Pay On Time

It cannot be stressed enough that one of the key elements of how to get a credit card and maintain an excellent credit score is to pay your balance on time every month. Even if your interest rate is low, the best way to build your credit is to pay your balance off every single month.

This is easily done by keeping your purchases small. Never charge more to your credit card than you have in your bank account. This is a simple way to make sure you are living within your means.

Make Wise Credit Choices

If you are over 21 and just getting your first credit card on your own, you may find that your underage friends are looking for co-signers for their cards. No matter how much you may wish to help, avoid co-signing on your friends’ credit cards at all costs. If they are not responsible with payments and overspend, your own credit can be demolished in no time, and you could be held liable.

Another important tip to remember for how to get a credit card is to avoid applying for multiple cards at once. It can be very exciting to see that line of credit with your name behind it, but applying for too many credit cards in too short of a time can hurt your credit. Students should stick to one credit card and build their credit score from there.

How to Get a Credit Card

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Read The Fine Print

Before learning how to get a credit card, you need to make sure you read the fine print accompanying the various cards you might be perusing. Different credit card issuers have various fees and rates that diverge according to your credit background, market rates and beyond. Read the terms and conditions carefully so you know exactly what is expected of you.

Applying for Your First Card

In learning how to get a credit card, look at an array of options to see which one best fits your circumstances. Narrow down the list, and compare different credit cards to each other to see which offers you the best options, rates, fees, rewards, etc. Several credit card companies allow you to complete a pre-qualification questionnaire that checks your credit to see if you are eligible to receive the card. This can streamline your credit card application process considerably.  

As a student, your best bet is to look for credit cards with no annual fees, with minimal interest rates, moderate credit limits and carefully spelled-out terms and conditions. If it sounds too good to be true, it probably is, so read the fine print, and decide what is right for you.

If you would like to try something other than a standard credit card, you might apply for a retail card. Your credit line will be much lower and the rewards are typically few, but you can still build your credit this way and practice responsible spending.

Conclusion

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Considering how to get a credit card for the first time is a process which requires thought and planning. Look at the various options available to you, and choose a card that will enable you to build your credit without having too much capital at your disposal.

Once you have been approved, monitor your expenditures closely, always stay within your means and be sure to pay your balance on or ahead of time. This way, you can build your credit score and set yourself on the road to financial stability at a young age.

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