Getting your first credit card can be thrilling. This magical card allows you to spend the money which you don’t have yet. Can’t get any better than that, right?
Hang on, before you get your hands on one, ask yourself these questions, particularly if you want to avoid landing in too much debt, too soon.
What is the purpose of your credit card?
“Because I can buy anything I want without paying for it first” is a dangerous stance to take, and may just be your first mistake when paying with credit cards. Think of it as a convenience, rather than a loan because credit cards charge just about the highest interest rates across all loan products.
Are you familiar with the charges associated with the credit card?
Be aware of the interest rates, annual charges and other charges associated with using credit cards. These can add to your outstanding balance very quickly.
How good are you in managing your personal finance?
Are you diligent in keeping track of your expenses? Can you pay your bills by month’s end? Are you willing to cut back your expenses if needed? If your answer is ‘no’ to any of these questions, then getting a credit card seems a bad idea. Credit card requires great management of your personal finances. To find out more about how to manage your credit card, you can check our tips on managing your credit card usage.
Want the best financial deals in town delivered to your inbox once a month? Sign up for iMoney’s Monthly Round-Up today!