When sorting through the mail, have you ever come across a credit card application addressed to you?
The thought of holding that small, shiny piece of plastic in your hands is tempting. The things you can buy with a credit card seem endless: that $400 laptop you saw at Best Buy, those shoes from the mall you wanted so badly, a concert ticket so that you and your friends can rock out to your favorite band.

A card can also be useful for in case of an emergency. What if your car decides to break down right when you’re on the expressway? Or you didn’t get enough financial aid so you need to use your own money to buy textbooks?

Having a credit card is a great financial investment, but with mostly everything, it comes with many responsibilities. Before sitting down to fill out the paperwork, here are some guidelines to keep in mind before making your final decision.

1. Have a Steady Form of Employment
Are you currently unemployed or have a small job like work-study? Then it’s probably best to hold off on getting a credit card at the moment. When credit card companies are looking for potential cardholders, they are looking for someone who has a steady and sizable source of income. This shows that the person can be reliable enough to pay their monthly payments and pay them on time (money.howstuffworks.com).

2. Check and Compare Interest Rates
The interest rate, or APR as it is most commonly referred to, is the annual rate of interest one is charged if their balance is carried over from the previous month (businessinsider.com). If you know you will be able to handle paying your bill in full, then an APR won’t apply to you.

But to be on the safe side in case if your finances change unexpectedly or you simply forget to make a payment, always check the interest rate. According to website the Business Insider, most card cards have interest rates ranging from 11%-20%. Since most first-time cardholders have a short or nonexistent credit history, the APR is most likely to be fixed at a high rate.

But do not let that stop you from comparing the interest rates of other cards. Shop around and read the fine print (no skimming) of all the card offers you received or inquired about. After researching each card, apply for the one with the lowest interest rate.

3. Beware of Hidden Fees
As a little kid, your worst fears were probably the monsters that were supposedly under your bed or the bogeyman lurking in your closet, waiting for bedtime to finally attack. But when you are an adult and looking to apply for a credit card, the biggest fear is hidden fees.

This is another good reason to always read the terms and conditions before applying for a card so that way, you can make a sound decision on whether the credit card is the right one for you. Some credit cards have new cardholders pay an introductory rate or a transaction fee, a fee a cardholder must pay when they use their card at a cash advance place or make a late payment (pbs.org).

You should also look out for annual fees. Some card companies trick people into thinking they do not have an annual fee, when in actuality, they really do, says the Business Insider. Most of time, a cardholder will not see an annual fee after a year of owning their card.

4. Learn the Difference Between a Secured and Unsecured Credit Card
When obtaining a credit card there are two types of cards to choose from; a secured card or an unsecured card. A secure card is best for first-time cardholders. It is specifically designed for people who have little or no credit history.

To get a secured card, you must put down a security deposit, ranging from $100-$300 (credit.com). The money you put into the account is then used into figuring out the credit card limit. For example, if you put down $200 for a deposit, around $400 is used as the card limit. A secured card is a great way to build up your credit, while learning the responsibilities of having a card.

After having a secured card for a year or so, cardholders can then decide if they want to switch over to an unsecure card. These are the cards that are found in the mail, at retail stores, and banks. These cards require that the cardholder borrow and pay back the lender under the set card limit (money.howstuffworks.com).

Like a secured card, cardholders must make a monthly payment. If one does not make a payment in full, then they will be charged with interest, with rates sometimes higher than secured cards.

For more information on credit cards or financial advice, please contact the Inside Track office! There are located in the Learning Resources Center in room 223. Or send them an email at theinsidetrack@hfcc.edu.