By Kari Johnson on November 30, 2011
.jpg.aspx) The reason everybody has credit is because you always need credit for one thing or another, whether it is to buy or rent a house, get a car, or even just own a cell phone. Your credit is the guarantee companies need to lend you money so that they know you will be able to pay it later. This is why having no credit is a problem. To solve this problem, many people turn to credit building credit cards.
When looking for a credit card to help you build credit, there are a few things you want to look at. For one thing, you want to look to see if the card has an annual fee. If possible, you probably want one without it. Also, the lower the interest rate, the better. However, since you will have this card for a while, you need to look past the introductory rates to what the rate will be after the initial period is over. Finally, you should look into what kind of penalties you might have to pay. Though you will be trying to avoid having problems that cause penalties, you should watch out for this just in case.
Besides costs, you should look into the benefits as well. Compare the perks that come with different cards. In the end, your priority should be the price, but if two cards cost the same amount, benefits like cash back and rewards can make a difference.
If you have no credit, most cards are going to have higher interest rates. However, if you are under 21 and can get a parent to co-sign the card for you, your rate may be lower. In fact, this may be the best way to get started. If you are an authorized user on a parent’s account, and they have good credit, that good credit can be transferred to you as well.
The most important thing to remember when using a credit card to build credit is that you want to build good credit. No matter which card you get, you should follow some basic guidelines for protecting your credit. To create credit, you have to actually use the card. The best way is to use it on small purchases you know you can afford and be sure to pay the balance at the end of every month. Do not use your card for big ticket items except in the case of emergency because this can put you in debt. Don’t sign up for a lot of cards or cancel them, and keep your credit limit low. If you are responsible with your first credit card, you should be able to build good credit with little problem.
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