You’re now in the realm of adulthood and it’s time to get a credit card. Here are some things to keep in mind as you make your first foray into the world of credit. You’re in a potentially good and a potentially bad situation – it’s your choice. If you use credit cards correctly, you’ll have more financial freedom. If you use them recklessly, you might face significant debt. Here are some things to think about:

  1. How do you spend?

    • You’ve already made up your mind that you’ll pay the balance owed each month. If that’s the case, the interest rate on the card might not seem so significant to you. Opt for a card that doesn’t have an annual fee and gives you a longer time to pay
    • If there’s going to be a balance on the card, look for one with the lowest interest rate
    • If you’re going to use the card for pretty much everything you buy, get one with a decent credit limit and a good rewards program
    • Emergency use only? Look for a simple card with a low fee and interest rate.

  2. Why you should get a credit card

    The first and foremost reason is to start building your credit rating which will set you up for loans in the future like mortgages, apartment approval and so on.

  3. The interest rate

    You’ll know the interest rate on a fixed rate card. A variable rate card will have fluctuating interest rates. But, even when the card has a fixed interest rate, the issuer can change it. There are things that can initiate that change such as late payments or going over your limit.

  4. Credit limit

    This is what the lender will let you borrow, and it could be anywhere from hundreds to several thousands of dollars. But don’t max out your card as this may be detrimental to your credit score.

  5. Grace period

    A grace period can be anywhere between 21-25 days. If you purchase anything within this period, there will be an interest fee until payment is due. If the balance isn’t paid in full on the due date, you’re bound to pay interest on your daily balance.

  6. Rewards

    This can be a nice perk. Things like cashback, redeemable bonus points or travel rewards are nice to have – and a good incentive to use your card. Use them if your card issuer offers them.

Keeping these 6 tips in mind will help you to choose the right credit card for you so you can start building your credit, earning rewards and enjoying financial freedom.