Applying for your first credit card?
Applying for your first credit card? Here are four things you need to know
With the festive season rapidly approaching, it’s a good idea to get your finances in order before Christmas arrives. This might mean cutting back on your spending, or it might mean applying for your first credit card with a reputable provider. If you opt for the latter, there are several things you should know, so here’s a quick Q&A to help you out:
What is credit?
First and foremost, you must understand that credit involves borrowing money with the agreement to pay it back at a later date – but not everyone is entitled to it. According to a report by the BBC, individual lenders use their own criteria when deciding whether or not to lend you money and often rely heavily on data supplied by credit reference agencies.
What is good and bad credit?
If you have good credit, it usually means you pay what you owe in good time and rarely have outstanding debts. Lenders feel confident about the way you handle money and are often prepared to agree to loans and credit cards. If you have bad credit, however, it tends to mean you have not paid credit bills on time and could find it difficult to borrow. Some people even have no credit, which means there’s no record of their money handling skills.
Which credit cards are available?
Once you understand how credit works, you can start to look at the wide range of credit cards available. The one you choose will depend on your individual circumstances and what you want to use if for. If you travel on a regular basis, for instance, a specialist credit card which helps you earn Airmiles every time you spend could be just what you need. Similarly, if you’re a fan of the beautiful game, a football credit card will give you access to a wide range of offers.
How do I find the right deal?
One of the best ways to find the right deal is to compare credit cards online. While some suppliers let you look at the cards within their range other sites make it easy to compare cards across the web. Differences in rates, fees and other terms can impact heavily on the cost of your credit, so take a good look at each card in detail. If there is an introductory rate, such as 0 per cent interest on purchase or balance transfers, look to see how long it was last and what the charges will be when the offers expires.
Applying for a credit card is relatively simple, but you must do your homework.