8 Things To Consider When Opening Your First Credit Card
This summer I attended a high school graduation party. Now 30 years old, it's pretty incredible to suddenly find yourself among college-bound, post-pubescent kids talking about things you feel as though you were talking about only a few years ago. (It's ONLY been over a decade after all).
There are the ongoing, inside jokes which seem to always end in nonsensical, exclamatory sounds not at all understood by the parents in the room.
There are the junior-high-aged siblings of the high school kids; old enough to hang around and hang out with their older siblings, especially well-versed in broad-based and/or hyper specific trash talk like being the best in the world (and in the room) at Madden or NBA 2K.
There are the high school guys who got every bit and more of the growth spurt you were promised but never received. There are the high school girls whose “fashions” remind you what a terrible sense of style you had at 17. When all together in a room, a symphony of olfactory offenses follows — a mix of hormones, pheromones, AXE spray and mustiness.
But another primary component of graduation festivities like these are the excited conversations about college. The university of choice is usually known by now, and graduates and parents are tying up loose ends and figuring out details for housing and new student orientation day.
The start of college is a natural beginning point to developing one's credit history, totally independent of parents — this usually happens with a starter credit card. For those looking for a first or new credit card, here are eight things to consider when selecting the best credit card program to apply for.
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Know the Interest Rate
The interest rate paid on balances for credit cards is still the single most important item any balance-carrying-credit-card-consumer should be concerned with. Knowing the interest rate and whether it's a variable or fixed rate will determine how much will be charged on balances you carry from month to month. Ideally (though rarely offered these days) you want a fixed rate card, hopefully below a 15 percent monthly interest rate. If you can get a card with a lower interest rate, more power to you.
Are You a Traveler?
I was born and raised in Pasadena, CA, but attended college in Hampton, VA (HIU, stand up). If you're a traveler or aspire to be jet-setting, applying for travel specific credit rewards programs is an excellent way to save money on flights you'll need to buy anyway. I didn't have a travel card back in college, but I did travel frequently back and forth between California and Virginia. Having had a travel card would have been hugely beneficial, if only for a free flight or two after so many crossings back and forth across the United States.
Avoid Cards with Annual Fees
Some higher-end credit card programs charge you a yearly fee to enjoy the benefits of using their card. In my view, you shouldn't be paying anyone for the pleasure of your doing business with them. If this is your first card, you're likely to have it for a long time. Paying a fee every year could really add up. Skip cards with annual fees and stick with ones that don't charge.
Ask for a Lower Interest Rate
Every credit card comes with an interest rate that is specific to the program, federally set interest rate and the applicant. Before applying, you'll usually see a range of possible rates. The interest rate you're given will fall somewhere between said range. After applying and getting your card in the mail, be sure to call the customer service line and periodically ask for a reduction in your interest rate. If you're a good credit user who pays their bill on time, there's a good chance you can bring down your monthly interest rate by several percentage points just by asking.
Free Credit Score Tracking
A huge new offering (that wasn't offered in decades past) is the ability to see your current, approximate credit score on each statement or in your online banking interface. More and more, banks and credit card companies are offering this as a feature included in your use of the card. You want this feature such that you'll be able to track your credit on a month-to-month basis, rather than having to figure out a way to quickly check your credit score once a year.
Consider Cards with Payment Grace Periods
Paying creditors late is the fastest way to ruin your credit score. But life happens to all of us. If you're prone to forgetting bills, find a credit program that offers you payment grace periods for those times when you need a couple extra days to pay your bill. This can save you heavy late fees and preserve your sparkling credit history.
You Only Need One
College and post college-aged people should try their best to limit their opening of credit cards to one or eventually maybe two. An excessive number of credit cards is usually a gateway to misuse and abuse. Stay disciplined and treat the opening of new lines of credit as major life decisions requiring a few weeks of thought and in-depth meditation with candles burning and SZA playing softly in the background.
Avoid Retail Store Cards
I used to work at a retail clothing store where I was tasked with opening as many new store credit cards as possible. (I often felt dirty after doing so). When retail sales associates say "it won't hurt your credit..." or that "you can save 20 percent now then close out the account..." say no and keep it moving. Retail store cards have notoriously high interest rates and don't fit into any advisable plan for opening new lines of credit and yes, when you open a store card, it will impact your credit history and score.