If you just celebrated your 18th birthday, you may be considering getting a credit card. Credit cards are so much fun. You can swipe over and over again buying that guitar your parents would not get you, or that new wig you have been looking for. But think twice. Be honest to yourself. Are you a person who never knows where your allowance went? Do you financial intelligence to calculate credit card interest rates better than a credit company? Are you always keeping an eye on financial news and updates? If you are, it is time you learn how to manage your credit and finance.
Fist of all, find out what your credit scores are. Even if you are young, and have no mortgage or a bank account, you still have credit scores under your social security number. If you do not have any bad record, even if you do not have loan, you will probably still have good credit. Do not assume your credit score is zero without checking first.
Second of all, find a credit company that offers low interest rate. If you see numbers such as 14%, 12%, you can ignore the companies. You may wonder why low interest rates are important since you are not going to spend that much. Imagine you spend $1000 this month, your APR (annual percentage rate) is 14%, you cannot afford to pay off next month, you will need to pay the minimum amount. In the following months you will be charged the 14% interest rate over and over again until your balance is zero. During these months, every time you swipe the shiny card, you are charged more interest. In no time, you would probably find yourself drowning in the river of interest money instead of the original amount you have spent.
So how do you find a credit card with low interest rate?
You may want to do more research before taking actions. Talk with representatives from more than 4 banks. Choose a smaller bank instead of banks with big names. Sometimes local banks would be more lenient to consumers in their community. Since their size is not as large as big banks, you may bargain a good deal. Do not look at the maximum amount you can use. It may be attracting, but think about the consequences and the responsibilities. Consult senior members in your family. Ask them what their experiences are with different credit card companies. If you parents already have credit cards, they may help you out with applying for the first credit card. Establish good spending habits, plan ahead, prepare for accidents, it will not take you 10 years to pay off your credit card debt.
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