Rules for Applying for Your First Credit Card
When you apply for your first credit card, there are a few rules you should keep in mind if you want to get your credit off to the right start.
First, just like with any decision in life, make sure you know what your goal is. Are you trying to establish credit? Do you want a card for the convenience of not needing to carry cash around? Do you want to to shop online easily? Are you getting a card so you can buy big-ticket items you usually don't have the money for? Once you have a really clear idea what your goal is, it'll be much easier to decide which card to apply for.
The next rule is important: Make sure you can pay before you apply for a credit card. Some credit card companies will offer cards to nearly anyone, and if you can't make the payments on your credit card, you can wind up in a downward spiral of late fees, skyrocketing interest and other penalties. This can create a sticky trap that's very painful to get out of. Before you apply, sit down and make a list of your income and expenses, and calculate how much you can afford. If your income varies, like a salesperson who works for commission or a server working for tips, keep that in mind and be very conservative when you consider how much you can afford. Calculate your monthly budget based on a lean month, and leave yourself plenty of leeway so you can still make your payments during tough times.
Third, make sure you know exactly what you're signing up for. It may be tempting to sign on the dotted line when you walk past a table in your college quad where a guy is offering free T-shirts to applicants, or to say "What the heck" when the salesclerk at the mall offers you 10 percent off your purchase if you get a department store card. Keep in mind, though, that these enticing offers are designed to get people to make snappy decisions without reading the fine print, and applying for credit is something you should never do on impulse. Leave your impulsive decisions for the candy bar rack at the grocery store checkout lane -- it'll be easier to work the extra calories out of your love handles than it will be to work away ballooning debt with a sky-high interest rate.