Getting Your First Credit Card
Building credit history isn’t easy. To get a credit card, you need a decent credit history. But how do you build that history if you don’t have a credit card? This Catch-22 might make it seem impossible to ever begin building credit. But there are steps that consumers can take. Maybe you are a college student, or possibly you are getting credit for the first time after a divorce. Follow this advice to get off on the right foot.
Assess whether You Need a Credit Card
Credit cards are very convenient. If your car breaks down, you can call up a tow truck and easily use your credit card to pay. When you have “plastic” in your wallet, you never have to worry about being out of cash. Credit cards can also make purchasing something easy if you don’t yet have the money but need the item now. Once upon a time, people used “layaway” plans in department stores. Now you can just pull out a credit card.
However, convenience is not the same thing as necessity. Do you really need a credit card, or can you put it off? If you are looking to start building credit, then assess whether you have the finances to pay your bills. If you don’t have a job, then you might want to wait a little bit before getting a card.
Look into a Student Credit Card
If you are in college, then you might already have received offers for credit cards. Banks are always looking to grow their consumer base and targeting college students is a common strategy. Banks figure that college students will eventually land good-paying jobs, so they are a decent credit risk.
College credit cards might have a very low credit limit, which is fine for starting out. You will build your credit history by using a card responsibly and paying off the balance every month. Once you graduate, you can ask your lender to upgrade you to a regular card, and many will be happy to do so.
Start Off with a Secured Credit Card
This is also a good option, and you don’t need to be in college to qualify. A secured credit card works like this—the user puts a certain amount of money in a bank account and gets a card with a limit up to the deposit. So, if you put $500 in a bank, you can get a card with a $500 limit.
The card is “secured,” meaning it is backed up with collateral, in this case the money in the bank account. This collateral provides peace of mind to the bank since, if you default, they can take the money out of the account. Using a secured credit card responsibly is a good way to begin building a solid credit history.
Contact Nowack & Olson if You Are in Financial Trouble
Many consumers start of responsible but can run into financial trouble for various reasons. If you are drowning in debt, don’t hesitate to speak to an experienced Plantation bankruptcy attorney. At our firm, we offer a free consultation to those who call 888-813-4737.