Plastic Power: Credit Card Guide

Published by Taylor Eakin on

Plastic Power: A Credit Card Guide

Whether you’re about to head off to college or join the workforce, you ought to get a head start in the world of financing. One of the main tools for financial planning is finding the right credit card, with plenty of perks.

Many credit card newbies make the mistake of settling for the first company that will send them that sweet, sweet plastic. The temptation is real, but being mindful and strategic when choosing a credit card can mean big payouts down the road. Yes, the lingo can be confusing when you first start your research, so we’ve broken down some common terminology below.

Annual Fee: an automatic fee charged once a year to your credit card account.

APR: stands for “annual percentage rate,” an interest rate for the whole year. This rate is divided across each month. For example, a 24% APR will result in a monthly 2% charge on your account. You can avoid this by paying your balance in full each month before the due date. 

Credit score: a number assigned to you primarily based on info from credit bureaus. Lenders use this number to assess risk, but so do other organizations like phone and insurance companies, and landlords.

Cash Back: an incentive program where a percentage spent by a credit card user is paid back to them by the company.

Interest: A charge added to your account when you don’t pay your balance in full by the due date.

There are many different kinds of credit cards that offer a variety of perks with them, the first being student cards. These offer several perks you won’t find after graduation, and extend a chance to build credit for the future.

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If you lack the necessary credit history to qualify for student cards, or you need to improve a bad score, a secured card is your best option. You don’t have to jump through hoops for one of these since the issuer isn’t taking a risk. You simply pay a deposit (often $200) to establish your credit limit, and the card is yours. All activity is still reported to credit bureaus, so you can improve or build your credit by making payments on time and keeping your balance low.

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So, you’re lucky enough to have your financial game in order – kudos! Now you have the privilege of getting a card tailored to your spending interests. Travel cards are one of the best options since flights and hotels are expensive, and you can rack up points quickly. 

For Jet-Setters:

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No matter which card you choose, it’s important to learn about all the cash back and reward policies so you can take full advantage. Keep in mind that your financial behavior now affects your future spending, like when it’s time to buy a car or house–and this will come a lot sooner than you think.

Most importantly, don’t make the mistake of treating your card like free money (it’s not) that you’ll never have to pay back (you will).

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