Credit Cards: Should You Have One?

In the mail, on the web, in your email and at most store checkouts, everywhere you turn there is a credit card offer. Before you find an offer enticing you to sign the application, it’s a good idea to stop and think about the impacts of a credit card and research which one is best for you.

Is a credit card right for you?

Credit cards contain a variety of benefits. Instant access to purchase goods and services, a method of building credit on your credit report, or it can be a backup payment method if your debit card is lost or stolen, just to name a few.

The most important question to ask yourself before anything else, is do you have the discipline to pay the card off every month? Can you have access to increased available spending and still stay within your budget? This is particularly important if you have other debts impacting your budget’s current flexibility. If you decide you are ready, but unsure of your discipline, you can start with a credit credit card that has a low credit limit. Regardless of the credit limit you are approved for, you can always call and have it adjusted to a lower amount. This can help ensure that if you find yourself struggling to pay back the full amount, you’ve ensured you can’t get too carried away.

Which card is right for you?

If you haven’t checked already, now is the perfect time to find out your credit score. You can get access to your score by accessing your free copy of your credit report. You are entitled to one free copy of your credit report every 12 months from each of the three nationwide credit reporting companies. You can order this at annualcreditreport.com. This site is the only site authorized for free credit reports. Or, if you rather, you can call 1-877-322-8228. Once you know your score you can better understand what credit category you fall into.

Typically, credit cards with the best incentives require participants to fall into the Good or Excellent credit category. These credit card incentives can include, cash back on specific purchases or all purchases, airline miles, and many other perks. Make sure the card you pick aligns with your lifestyle to maximize the benefits. For instance, if you love to travel, a credit card associated with a specific airline you use most frequently might be most cost effective as baggage fees are usually waived if you use your card and you will accumulate frequent flyer miles as well.

You will also want to be sure to fully inspect fee structures. Many cards available to customers with fair or bad credit charge immediate fees for opening the card. As always, advanced research will help you make the best decision. Pay particular attention to the regular APR, annual fee, late fee and any other fees that might be associated with the card.