Using Your First Credit Card Responsibly
The first cable TV branded credit card in the Philippines (Photo credit: Wikipedia)
Not everyone is ready for a credit card once they turn 18
These days, getting a credit card is considered a financial rite of passage. The majority of people know that receiving a credit card is important; your credit rating, starting from your first credit card, sets a financial foundation that can last for life. Not everyone is ready for a credit card once they turn 18. New credit rules in the U.S. insist that you get a co-signer if you are under 21 and unemployed. Even if you are 21, you might not be prepared for a credit card. Before getting a credit card, it is vital that you honestly evaluate your finances, and your habits. You should carefully consider whether or not you are truly ready for a credit card.
Problems Arising from Credit Card Use
The biggest issue with receiving your first MasterCard before you are adequately prepared is that you could quickly build up a great deal of debt. Credit card use can be easy – sometimes too easy. You feel as though you can buy whatever you want. 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.
Since many people get their first credit cards as students, and youth is regularly associated with impulsive behavior, it comes as no shock when impulse buying begins to add up and debt grows. For some young people, being approved for a credit card too early leads to a cycle of debt. No matter if you have the best credit card offer, you could find yourself saddled with too much credit card debt. In order to avoid this fate, you need make sure you are truly ready for a credit card.
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.
As you practice controlling your spending, and as you keep track of what you use your debit card, you are proving that you could be ready 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 apply for your application for your first Visa or MasterCard, learn to properly budget your money. 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.
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- 3 Ways To Pay Down Your Credit Card Debt (debtreliefalabama.org)
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So I will spend like no tomorrow? No, with a pre paid Mastercard your limit is the quantity of money you put into your account, once that's gone, your card can't be used any more. After you deposit additional cash into the account you can again use the card. So what is the disparity between a Mastercard and a pre-paid Visa card? A pre paid Visa card is very like a regular Mastercard, except there aren't any costs.