Thanks to the fact that your credit card can open up a wide range of possibilities when it comes to managing your finances, you may aspire to get one in the coming year. It will mean, for one, that you’ll be able to shop without having to worry about carrying cash with you at all times, making your transactions much more seamless and convenient. It will also mean enjoying flexible payment options such as installment plans, which can be particularly helpful if you’re planning to make any big-ticket purchases. Plus, credit cards come with rewards programs that treat you to various perks and cashback opportunities.
However, before you send in that credit card online application, there are some things you should consider first to determine if you’re actually ready to own your first credit card. Here are some questions to ponder to help you evaluate if getting a credit card is the right move for you:
1) Do I Have Clear Plans on How I’ll Use My Credit Card?
When applying for a credit card, it’s important to determine a clear reason behind your application first. Are you interested in a credit card for the convenience it offers? Are you planning to use it mainly to accumulate points from your purchases and thus obtain rewards? Or do you just want one as a backup in case financial emergencies arise?
Having clear goals for your credit card will increase your likelihood of using it responsibly instead of just a means to spend aimlessly. Moreover, knowing your priorities makes it easier for you to determine what kind of credit card may suit your needs.
2) How Is My Current Financial Situation?
Your current financial situation is also an important aspect to consider before applying for a credit card. Do you have a steady source of income? Are you able to pay your bills and other expenses in a timely manner, or are you constantly having trouble doing so?
Remember that getting a credit card is also a responsibility that you need to fulfill. If you’re currently not in a stable financial situation, then a credit card may only end up adding to your worries. Prioritize building a stable financial situation for yourself first before getting a credit card so that you can be in a better position to adequately pay for the bills that come with it.
3) Do I Have Any Outstanding Debt or Loans?
Having outstanding debt or loans means you’re already allocating part of your income to paying them off. As such, assess first how well you’re managing these financial responsibilities.
If you’re able to make debt or loan payments comfortably, with room to spare in your budget, then that means you may be able to confidently pay for your monthly credit card bills as well. However, if you find yourself stretched thin already by current debt or loan payments, then it’s better to pay those off first before getting yourself a credit card.
4) What Are the Fees and Interest Rates of the Card I’m Planning to Apply For?
Another sign that you’re ready for a credit card is that you’re willing to put in the work to research the fees and interest rates that come with it to better understand the terms you’re getting into. Make sure you shop around for credit card providers first and evaluate the fees and interest rates that come with each of their cards. This helps you determine which credit card programs are the best ones for your financial means.
In particular, try to look for credit cards that offer no annual fee for life to lessen the burden of fees on your budget. You can look into the card’s foreign transaction fees as well, in case you’re planning to frequently use your card abroad. Knowing all this beforehand can save you from the trouble of dealing with unpleasant surprises when your first credit card bill arrives.
5) What Rewards or Benefits Do I Want My Card to Have?
You should note that different credit cards offer different rewards as well. If your main goal in applying for a credit card is to enjoy the perks that it offers, part of getting ready to obtain one is knowing first what benefits you’re expecting to get. This allows you to evaluate whether the card you’re applying for fits the bill, or whether you’d be better off looking for a different one instead.
For instance, if you’re planning to rack up points to earn miles for free flights, then it’s better to choose a credit card that can offer more miles per spend to help you get to your goal faster. Likewise, if your main goal is to get more cashback, as you’ll be using your credit card for day-to-day expenses such as groceries, then choosing a credit card with high cashback rates—like the Maya Landers Cashback Everywhere Credit Card—is your best bet.
6) How Disciplined Am I in Handling My Finances?
Lastly, before you apply for a credit card, evaluate your own financial habits as well. Are you capable of sticking to your budget, or do you always find yourself overspending?
If it’s the latter, then be prepared to be stricter with your finances and adjust your spending habits if you intend to get a credit card. The way you handle your finances now will also reflect on your usage of your credit card once you get one. Having good financial habits is a must to ensure that you’re truly ready for the responsibilities that come with owning a credit card.
Ultimately, you should apply for a credit card with the right things in mind, or else you might only risk taking on more financial responsibilities than you can handle. Ask yourself the questions in this article first to evaluate your readiness for a credit card and how likely you are to use it responsibly.
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