First Credit Card Application

These days, applying for a credit card is considered a financial rite of passage. The majority of people know that getting a credit card is important; the way you use credit sets the foundation for your credit rating for the rest of your life. Not everyone is ready for a credit card once they turn 18. New credit rules in the U.S. require that you get someone to co-sign if you are under 21 and unemployed. Even if you are older than 21, you might not be prepared for a credit card. Before getting a credit card, it is vital that you know yourself and your financial habits. You should know that you are ready for your first credit card.

Possible Pitfalls with Credit Cards

The biggest issue with receiving your first credit card before you are disciplined enough financially is that you might lose track of how much debt you are accumulating. Credit card use can be easy – sometimes too easy. You believe you can buy anything – no matter the price. The minimum payments on credit cards are so low that it is easy to believe that you can afford something that is in actuality out of your price range.

Because so many first time credit card users are students, and youth is usually associated with impulsive behavior, it isn’t too surprising that debt grows as impulse buys are made using credit. For some students, getting a credit card too early leads to a cycle of debt. No matter if you have the best credit card offer imaginable, you could end up with too much credit card debt. Unless you make sure that you are truly ready for your first credit card, you could find yourself in a dangerous financial situation.

Determining Your Readiness for a Credit Card

The most important factor in successful finances and responsible credit card use is discipline. You need to be able to distinguish between wants and needs, and to rein in your spending on wants. You should only purchase items that you already have the money for, paying off your credit card balance each month. Practice with a debit card, keeping track of your spending and staying within a budget. If you can avoid overdrawing your account, and if you develop a habit of staying within a budget and staying out of debt, you might be ready for a credit card.

If you can control your spending, and if you keep track of your expenses and stick with your budget, you are showing that you should be prepared for your first credit card. Once you have your card, though, you need to continue your good habits. In order to avoid credit pitfalls, you need to pay off your balance each month, and control your spending so that you don’t charge more on your card than you can pay off. A good idea is to begin with a student credit card or a card with a low limit.

Before you fill out an application for your first card, practice a little with following a budget. There are a number of personal finance software applications on the web that can help you get used to managing your money. A certain comfort level with budgeting and other aspects of financial planning is necessary for wise credit card use.

Drew Cassels is a writer on topics such as Canadian Credit Card applications.