Whether or not credit cards will be useful tools for you largely depends on your lifestyle and financial habits. Credit cards can be helpful for people who regularly pay off the balance on time and in full each month. This behavior builds a solid credit history, which is important not only for approval for better cards, but also for other life expenses like renting an apartment or getting a car loan. Credit cards also provide some fraud protection, meaning cardholders are usually not liable for unauthorized charges made to their accounts.

Pro Tip

If you’re primarily getting a credit card to build credit history toward qualifying for a mortgage or other loan, be sure to check your credit reports before you apply. You may already have credit history due to other payments being reported to the credit bureaus, such as your rent, student loans, phone bill or utilities.

Pros and Cons of Credit Cards

Pros of Credit Cards

  • Opportunity to build credit. Using a credit card responsibly by making on-time payments and avoiding high balances, can help you establish and improve your credit history. This can help you get approved for other forms of credit, like an auto loan or a mortgage, down the road.
  • Rewards and cash back. Many credit cards offer rewards programs that allow you to earn points, cash back or miles for every dollar you spend. These rewards may be redeemed for things like statement credits, travel, gift cards and more.
  • Fraud and theft protections. Most credit cards come with zero liability protection. So if your card is lost or stolen, you won’t be on the hook for any unauthorized purchases.
  • 0% intro APR offers. Certain credit cards offer a 0% introductory APR period during which you can make purchases without accruing interest. These 0% intro APR offers, which may last for 15 months or longer, may be ideal for financing a large purchase interest-free.
  • Travel perks. Frequent travelers will appreciate that some credit cards provide travel-related benefits and protections such as trip insurance, rental car insurance, airport lounge access and the ability to transfer rewards points to hotel and airline partners.

Cons of Credit Cards

  • High standard interest rates. Outside of 0% APR promotional periods, credit cards are considered a high-interest form of debt. Standard annual percentage rates (APRs) for new cardholders generally range from the high teens to high twenties. You can avoid interest charges by paying off your balance in full each month by the statement due date.
  • Other fees may apply. In addition to interest charges, credit cards may come with other fees, such as annual fees, late payment fees, cash advance fees, foreign transaction fees and balance transfer fees. These fees can add up quickly and will eat into any rewards you may earn.
  • Risk of overspending. Credit cards can make it easy to spend more than you can afford since you don’t need to have cash on hand to make a purchase. If high credit card charges lead to carrying a balance, you will accrue interest if you’re not within an introductory 0% interest period.
  • Approval requirements. Some credit cards may have strict approval requirements, such as a minimum credit score or income level. This can make it difficult to qualify for them, especially if you’re new to credit. Before applying, check your credit score and ensure you apply for cards designed for your credit.
  • Risk of credit damage. If you make late payments, miss payments or carry a high balance, this can negatively impact your credit score. Lower scores will make it harder to get approved for credit in the future.

When Should I Get a Credit Card?

The best time to apply for a new credit card depends on your financial position and goals. Generally speaking, the sooner you can start using a credit card to build stronger credit, the better. This being said, applying for a new card is a major financial decision and shouldn’t be done hastily. Credit cards are ideal if you can pay the entire statement balance each month. However, due to the high interest, they are not a good means of borrowing money.

How Old Do You Have To Be To Get a Credit Card?

In order to apply for your own credit card, you must be 18 years old and demonstrate an independent ability to pay if you are under 21, in order to become the primary account holder. Very few issuers allow co-signers, so you’ll either need to qualify on your own accord.

Teenagers and young adults can also become authorized users on a trusted adult’s credit card. This can present a way to help teens get a jumpstart on building credit and help teach your kids responsible financial habits. However, this should not be entered lightly. The account holder is responsible for full payment of any charges the authorized user makes, but both parties are negatively impacted by late or missed payments.

Is It Okay To Never Have a Credit Card?

While it is not necessary to carry a credit card, giving up on credit cards completely may forfeit a number of opportunities for financial growth and benefit. Credit cards provide a relatively easy way to build a credit history, which in turn can improve your insurance rates, security deposit requirements for renting or the loan terms you receive for cars, personal loans or mortgages.

By foregoing credit cards, consumers may also miss out on rewards programs and robust fraud protection. You may also encounter services that require you to have a credit card on file—like booking some rental cars or hotel rooms. If you’re committed to living a life without credit cards you can certainly use a mix of cash, checks and debit cards.

This may help you avoid the risks credit cards may pose, like overspending, fees and interest. However, learning to handle credit cards responsibly may provide a greater degree of convenience.

Why Can’t I Get Approved for a Credit Card?

Several factors may make it more difficult for you to obtain a credit card. If you do not have a job or a documented source of income, you are less likely to receive approval for a credit card. Similarly, if you have too much debt, bad credit, are under 18 or do not have a Social Security number, getting a credit card in your name can be very difficult. While there are ways to work around these issues—like becoming an authorized user or getting a secured card—it can take some persistence and patience while working through the process.

How To Get Approved for a Credit Card

To get approved for a credit card, start by checking your credit score with one of the top credit monitoring sites. Then search for cards that match your credit rating. While credit card companies don’t generally disclose the exact credit score that they require for their cards, some provide a range such as excellent, good, fair or rebuilding.

Pro Tip

Some card issuers also offer preapproval checks that do not impact your credit score. There’s no obligation to move forward with applying after you’ve been preapproved. But if you do decide to sign up for a card, you’ll be asked to fill out a full application which may involve a hard inquiry on your credit report.

Even if you don’t yet have a credit score, you might still be able to get approved for a secured card. Alternatively, you could wait to apply until you’ve had time to build credit through other means, such as being added as an authorized user to someone else’s card.

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Last Update: June 18, 2024

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