Getting A Credit Card For The First Time Isn't Just About Swiping
Swiping is one thing this generation has become accustomed to — but not all swiping is as simple as going left or right. Swiping a credit card comes with major responsibilities, which is why you should educate yourself on what they're for, and most importantly, how they can aid or hurt your credit. There's tremendous adulting involved with getting a credit card for the first time — and it's not the kind that should be taken lightly (although, ironically, the card is plastic, practically weightless, and super bendy).
OK, not to get all scary or anything, but your credit is like a letter grade that follows you throughout your adult life. If you mess up, there's no such thing as taking the test over or getting a curve. It's fixable, but it's not a quick fix. According to Credit Karma, data collected from 2017's first quarter revealed an adult in the United States equips themselves with two to three credit cards. You've likely become more apt to checking your credit score since you've been out on your own, because it can dictate parts of your livelihood like getting a car or approval for an apartment.
Credit cards can help you attain a good credit score, but that's only if you use it wisely. Your credit really is like your monetary word to outsiders that you are responsible. It definitely has its perks, and if you're considering getting a credit card or recently got one for whatever reason, you'll need to keep some key info in mind.
1. You're Taking A Chance With Your Credit
Maybe "chance" sounds a little bit intimidating, but ultimately, you are leaving a portion of your credit in your hands — literally. This doesn't automatically mean you are going to fail and screw up your credit. Just keep in mind that getting a credit card can affect you in a good or bad way. It's all up to how you manage it.
2. It's Not "Free" Money
"Free" and "money" in the same sentence already sounds like an oxymoron. Getting a credit card doesn't mean you have a consistent flow of income like a job. It's a set amount, and once you use it all up, you have to pay it all back. It should be reassurance it instills you with, not reliance.
3. You Will Likely Owe More Than You Spend
Just because you spend $100, that doesn't mean that's the exact amount you'll have to pay off. Make sure you look at your interest rates. According to the Consumer Financial Protection Bureau (CFPB), interest is how much the financial institution you are borrowing from is charging you for using the money on the card. Remember, nothing is really free.
Most cards will state an annual percentage rate (APR), which is what your bank uses to determine how much you owe them, on top of what you spent during that billing cycle. Usually, to attract consumers, credit card companies will offer a grace period where that APR stuff doesn't kick in for a bit. American Express offers no APR for the first 15 months with one of their credit cards. It really depends what company you get your card from.
4. There Are Consequences For Not Making Payments On Time
When your alarm clock goes off in the morning, you might set the snooze button and deal with it later. Credit card payments are not the same thing. Not making your payments on time can affect your credit, and it only gets worse the longer you wait. If you need to set yourself a reminder, do it! Pay those bills on time, and you will definitely be thanking yourself later.
5. You Haven't Uncovered A New Way To Fund Shopping Sprees
It will be so enticing and daring to treat yourself to all of the things you couldn't before when you solely had the funds from your debit card. Think twice before raiding the clothing racks, though — because once you start swiping, it'll be difficult to stop. Make sure you aren't going overboard, because it's not an endless amount of funds. You will have to owe it back, and you don't want to cringe when your bill arrives.
6. Bill Collectors Have Round The Clock Superpowers
If you don't pay your credit card bill and it gets sent to collections, your phone will never stop ringing. When you don't pay your bill for a certain amount of time, the bank will sell your case to a collections agency. I am not sure how their shifts work, but it's built to inevitably press you all day, everyday when those bills aren't paid. Having an account sent to collections will significantly affect your credit score.
7. Don't Hesitate To Ask Questions
I get it — you're an adult, and being an adult means you should know absolutely everything by now and shouldn't have to ask questions. Lies! It's your first credit card, and if you are confused or don't understand something, open your mouth and ask questions. You could dodge so many pointless obstacles and frustrations that way. Life's not always cut-and-dry.
Adulting might be pulling you in a lot of different directions, but when it comes to a credit card, make sure you're focused on one critical thing — your credit score. Being educated and aware makes all the difference.