How to Apply for Your First Credit Card

Understanding Credit Card Benefits

Take advantage of credit card benefits, but understand its limitations, too.
Take advantage of credit card benefits, but understand its limitations, too.
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Lots of credit cards come with special features to attract consumers. These benefits can include cash back, frequent-flier miles and "points" that you can trade in for merchandise.

When you're comparing card benefits, think about your spending patterns and which benefits would be best for you. For example, as of July 2010, the Capital One No Hassle Cash Rewards Card offered 2 percent cash back on groceries and gas, and 1 percent cash back on other purchases [source: CreditCardGuide]. This might sound great to you if you plan to buy lots of gas and groceries with your card. If, on the other hand, you never buy gas or groceries with your card, but you travel a lot, you might prefer a card that offers frequent-flier miles.

Study the details of the card's benefits to see if they're right for you. If the card offers cash back, how often do you get it, and in what form? Once a year by check? Quarterly in the form of a gift card? If the card offers points, what can you get with the points? Can you trade the points in for gift cards you can use anywhere, or do some cards only work at certain places? Can you only trade the points in for merchandise, and is the merchandise anything that you're interested in? How often can you redeem your points? If the card comes with frequent-flier miles, are there restrictions on how you can use them, such as "blackout dates" during certain times of the year?

Make sure you're well informed about exactly what your credit card's benefits can and can't do for you. Most importantly, though, don't let all the extras distract you from the basics: the interest rate and general terms of the credit card agreement. After all, beneath the fancy stuff, you're still signing up for a credit card, which means you're entering into a financial contract.