There are times that we just have to tell ourselves “not yet.” Sometimes it just is not the right time to do some things. When it comes to deciding to get a credit card, we have a few things to consider first.
Pre-Credit Card Debt
When it comes to debt, no one wants to do go there, it just happens. Currently, if you go to college, it is inevitable. Graduates already know that they will be paying off thousands of dollars in student loans. Adding credit card debt to that would not be a financially sound move.
People who have other large debts like auto and mortgage also would not be making a financially sound decision to add credit card debt to their responsibility until they brought down their current debt.
When we have managed to bring these kinds of debts down to a more manageable liability (because that is what debt is) and our credit report reflects a rise in our credit score. Our payment history will have done that and then we may be able to think about what type will best fit our needs when we apply to get a credit card.
[Read: Credit Card Application Denied]
Recognizing that Bad Spending Habits Should Not Get a Credit Card
If we know that our spending habits are out of control then we should be wise enough to tell ourselves we should not get a credit card. It is very easy to overspend on a credit card, even if we know we are not making enough money to cover it. We first have to learn to ‘live within our means’ before we put ourselves in the position of ‘living beyond our means.’ Using payday loans is the same thing. We are just digging ourselves deeper into debt every time we try to cover one debt with another. “Robbing Peter to pay Paul” is never a good idea because eventually we will run out of people to “rob.” To get a credit card under these conditions is never a good idea.
We need to be financially responsible before we should fill out the application to get a credit card. If we cannot get out of debt then we should not get a credit card to help us get into more.
Don’t Get a Credit Card and Then Try to Understand How They Work
If you are unfamiliar with credit cards, it is not advisable to get a credit card until you have done some homework. You need to know how charges work, the credit limit, what the finance charge is and interest rate. Then there is the all-important due date that you should always make sure you pay in a timely manner without using too much if any of the grace period the credit company allows you. Finally, there is the minimum payment due, that you are required to pay by the due date. That is just covering the basics.
Is it Important to Get a Credit Card?
When we think about the ways that we can incur debt without a credit card, the question arises do we need to get a credit card. There are alternative ways to live without using a credit card. Many have gotten themselves into debt over credit cards and no longer use them. They use either debit cards or cash. It makes it a bit harder to secure rentals because there is usually a larger security deposit, but people tend to deal with that, rather than use a credit card.
How to Get Out of Paying Interest When You Get a Credit Card
This is an easy answer but you need to be super responsible. Always pay your credit card in full. That even sounds easy. The problem is, problems arise that can prevent that from happening. Emergencies occur. Someone could get sick, a lay-off or an unplanned trip. It could happen, and then what? You are left with a bill you planned to pay but cannot now. The first rule of thumb, get on the phone and call your credit card company to let them know. You should never leave credit card companies unaware. If you are just at that point where a credit card would be hard for you to pay off if an emergency were to arise, maybe now is not a good time to get a credit card.
[Read: How to Avoid Credit Card Danger]
Other Options When You Don’t Get a Credit Card
Another way to help you is to open an account with Payment Reporting Builds Credit (PRBC). This is another form of a credit report based on your payment history of your monthly bill payments. These payments include rent, utilities, cable and insurance. These are the payments that the other credit reports ignore and can help you get approved when you apply for loans. You manually add the accounts you want to be reported and your report is only shared when you give your permission. This report is called a FICO Expansion Score.