Credit Cards? When is it time to sign up?
Have you lived your life envisioning your first credit card? That first credit card is a big deal. A credit card can be an excellent tool when building and developing a credit history. We have a couple reasons why a credit card can be right for you and one reason why you might choose to wait on opening a credit card!
Ready for a credit card!
Are you ready to start creating a credit history?
The earlier you start using a credit card the earlier you can start creating a record of credit. Your credit history is one of the scores that is used to create your FICO Credit Score. Having a lengthy history can go a long way for someone, especially when trying to buy your first home. When your FICO Credit Score is calculated, 35% of the score is related to payment history and 15% of the score is related to credit history! 50% of your score could be tied to using and paying off a credit score each month!
A Word Of Caution! Getting a credit card early in your adult life will add years to your credit history, but be careful not to pile up debt! A credit card is a tool but if used incorrectly it can really bite!
Can you handle a balanced life?
Credit cards are a great way to build a credit history, earn rewards, and offer great security features. One thing that separates credit cards from debit cards is the fact that you carry a balance. Credit cards you pay off each month while debit cards you pay as you go. Can you handle another bill in your life? Are you going to remember to pay the bill in full? If the answer is no, move onto the next question!
Should you wait?
What about the debt?
Are you worried about over spending your limit? If that is a problem, and it is a major concern, there are options available. Secured Cards might be the way to go. Secured cards require you to have a bank account attached to the credit card. Your spending limit is then limited to what is in the account or what is tied to the card. So if you tie $1500 to your secured card, that is all you can spend at a given time. Generally speaking, these accounts vary from bank to bank, so it is best to ask. If you think a credit card may be to much to handle, debit cards are still a fantastic way to pay for everyday purchases, are safe/secure, and can also reward you!
Credit cards are a fantastic tool. Signing up for a credit card is a huge step, a great way to build credit, and can help you become a homeowner. Just remember to pay your bills! A major downside of credit cards is you will be tied to some debt, unless you pay off each purchase as you go! If you can handle the risk and afford your bills, it might be time to take the plunge!
If you think now is the time to sign up for a credit card, UCB can help with your first credit card!