Are All Credit Cards Bad?
If you do not have any credit cards, you may have this preconceived notion that all credit cards are bad and you should stay away from them.
The truth is that credit cards are not bad. But, they must be used wisely! It is important to become financially literate before you inquire about for a credit card. Credit cards have become an integral part of our financial lives, offering convenience and flexibility in managing our expenses.
They are simply financial tools that can be used advantageously or disadvantageously, depending on your knowledge about credit cards and the manner in which you choose to use them.
While it seems like credit cards only accumulate debt from high interest rates and beyond-the-limit spending, which can put you in a vicious debt cycle, it is important to note that you must limit your spending with a credit card in order to control your not-so-healthy spending habits. Credit card debt, not the credit card itself, is the problem. Knowing how credit cards work and how they should be used in various situations is the key to managing your spending habits.
What Are Credit Cards Used For?
Nowadays, credit cards are useful for a number of things and can potentially come with benefits. With a credit card, you can build credit and pay for large purchases without carrying cash with you. Most people get a credit card as soon as they reach the ripe adult age of 18 to help them establish their credit history early, and others do so when they need to start a business or take on activities that warrant constant and (sometimes large) spending habits.
However, you need to have a good reason for adding a new credit card to your open account by weighing all its pros and cons. You should also know there are alternative ways to build credit rather than getting a credit card! This includes being an authorized user on another person’s card (your parents, for example). Keep reading to learn everything you need to know before you get a credit card!
Some Things to Know Before Getting a Credit Card
As previously mentioned, knowing all about credit cards and how they work before getting one for yourself is important. You should not be getting a credit card simply for fun. That is the easiest (and fastest) way to accumulate debt.
Here is what you should know before getting a credit card:
Not all credit cards are for beginners.
If this is your first time getting and using a credit card, it is improbable that you qualify for the best credit card options. The best ones come with attractive perks and rewards, 0% interest periods, and large sign-up bonuses.
The best credit card options are available to those with high credit scores (above 690) that meet specific income requirements. While credit cards can provide a lifeline for individuals with bad credit, they also come with several drawbacks that need to be carefully considered.
Hence, for your first credit card, especially if you have little or no credit history, you may have fewer options, so you should choose an option carefully. Credit cards aren’t bad, but your decisions could be bad if you aren’t careful! However, it is important to note that it pays to be cautious as a first-timer.
Here are some credit card options suitable for you as a beginner:
- Secured credit cards, which require a deposit
- Student Cash Back Credit Cards
- Credit Cards that Cater to Individuals with No Credit or Bad Credit
Remember, the best credit cards for you have three requirements; they fit your spending habits, your goals, and your lifestyle.5 If you want to get a secured credit card or check out your other credit card offers, click here! Max CashⓇ is happy to show you a few offers from our partners.5
Being careful with your first credit card, as the rest of your financial life depends on it.
Having a credit card is a potential way to improve your credit score. However, not paying the required attention to your credit card can harm your credit score.
Your card issuer (the company that issued your card) submits your credit card activity to the major credit bureaus – Experian, Equifax, and TransUnion – for them to compile and create your credit score/ credit report. The bulk of this information contains reports of the timing of your payments and how much credit you have used so far.
To ensure a superb credit score, you must make payments early and refrain from reaching your card limit as much as possible. Most financial experts recommend staying under 30% utilization. Click here to learn more about your credit report!
Late payments are/can be costly.
Missing the due date for your credit card could cause the following issues:
- Late charges or fees: Typically, you can only be charged one late fee per billing cycle, and this fee is usually $30-$50, depending on your provider, because penalty rates can vary.
- Penalty APRs: These are high interest rates that are charged if you violate the card’s terms. This typically happens if you do not pay your card on time. It may occur if you have exceeded your credit line for a specific period of time.
- Credit Score Damage: You may be able to pay off your late fees without hurting your credit score. However, if you choose to wait more than 60 days to pay your credit card, your score could be negatively affected.
A good way to avoid late fees is to set up automated payments straight from your bank account. You should also set multiple reminders to help you remember when to pay before the deadline approaches.
All applicable rates and fees are important to understand.
Credit card issuers are required to disclose their fees, APR, and other necessary information during y our application. Take a closer look at some of the terms you should know before you get a credit card:
- APR (Annual Percentage Rate): Credit card APR, or Annual Percentage Rate, is the interest rate charged on balances carried over from one billing cycle to the next.
- Annual fee: What the card issuer charges yearly (if applicable).
- Late fees: If you do not pay your credit card bill (at least the minimum amount) by the established due date, the card issuer may charge a late fee.
It is essential to carefully review the rates and fees disclosure provided by the credit card issuer. If you have any questions, feel free to reach out to their customer service line!
If Credit Cards Aren’t Bad, Where Can I Get One?
Credit cards aren’t inherently bad. Misuse, poor spending choices, choosing the wrong credit card option, and not knowing all the opportunities that come with using a credit card contribute to the popular belief that credit cards are bad. It’s important to stay informed and make good choices when you get a credit card! If you are interested in inquiring about a credit card, let Max CashⓇ help connect you to an offer today.5 Whether you are searching for a secured credit card or another offer, click here to get started. Or, call us at 1-833-207-9052 today to learn more!
