Credit cards: Getting credit and knowing the score
Getting your very own credit card will either seem terrifying or exciting (eek!). Having credit at the touch of a button comes with a long list of benefits, but its easy to go overboard. We’re breaking down the basics.
After you celebrate turning 18 you are eligible to apply for your first credit card, even if your parents have left you terrified by talking about hefty interest rates and crippling debt.
Getting your first credit card means money, responsibility, and building your credit rating.
Your credit rating
Ok, so all your life you’ve heard people mention credit ratings in hushed tones, mainly in the bank or by your mum and dad, but what does that even mean?
Your credit rating, sometimes called a credit score, determines if you’re eligible for things like credit cards, loans, or a mortgage. Essentially, its the way that banks and other lenders judge you.
That all seems far off in the land of adulting, but you already have a credit rating even if you don’t use any of these services.
Unless you have a secret teen gambling addiction, you don’t have anything to worry about. Your credit rating is likely quite average because you won’t have had any way to build it yet, but small things like having the wrong address listed with your bank can affect it.
Getting your first credit card, and using it sensibly, is the easiest way to build a good credit rating.
The easiest way to apply is in branch, but you can also apply over the phone, by post, or via our friend the internet.
Before you apply it’s important to find the card that is right for you.
All the technical jargon and percentages can be confusing, by making an appointment with your local bank you’re taking the leg work out of finding a card.
At your appointment the bank clerk will tell you what cards you are eligible to apply for, which card would be best for you, and what all the technical info means.
Before you know it you’ll be approved for your first credit card.
Along with building your credit rating, having a credit card comes with a whole load of benefits.
Some credit cards offer an interest free period, usually for 12 or 24 months, that means you are effectively borrowing money for free as long as you make your monthly payments. When you are in your interest free period you could be expected to pay back as little as £5 each month.
If you’re a shopaholic like us, the fact that you can buy now and pay later is arguably the biggest benefit of having a credit card. Imagine a new Fenty lip gloss colour is released and you don’t have to wait until next SAAS to buy it?!
It also means you can pay for your purchases over a longer period of time. This is perfect for when you spill something on your laptop, fry it and have to buy a new one when you really can’t afford it.
All these benefits come with some pretty big risks – yes, your parents were right about some things.
Getting a credit card is not an excuse to live like a Kardashian or shout treat yo’ self every time you see something remotely cute to wear – it can be a slippery slope to debt.
After your interest free period the amount you owe starts to mount up quickly. It might seem easier to close your internet banking app and forget about it, but if you don’t pay your credit card off on time it will only work against you.
Before you make your first purchase come up with a plan of how and when you’ll pay the money off. There’s nothing wrong with splitting a payment up over a few months or buying a treat now and then, as long as its within your means.
It isn’t all doom and gloom: Keep on top of your monthly payments, don’t buy things far out of your price range and you’ll be building your credit rating, not destroying it.