subject: It's Never Too Early To Start Building Credit [print this page] Stepping into the world of plastic can sometimes feel like mission impossible. When you apply for a credit card the bank will try to establish your credit history. Now, if you happen to have credit records against your name then fine, but what if you are just about to start your credit card journey? Sounds a bit like catch-22, doesn't it? Fortunately, many credit card issuers recognised the problem and now have products that target this niche. Furthermore, there are various tips and tactics you can apply to go around this obstacle.
Credit cards are a great product that can help you build up your creditworthiness. Although not the easiest ones to obtain first, once in your possession and used responsibly they can put you on the right track pretty quickly. If you are in any doubt, remember that credit cards, if managed wisely, are a stepping stone to more leveraged products such as car loans, mortgages. Without a sound and established credit history you may never qualify for a new home or a round-the-world trip you always dreamed of. Yes, planning is the key to a bright financial future.
Fist thing first, look for an issuer with a special offer or an incentive scheme. There are many banks that offer credit cards for people who are just starting their first credit line and despite what many people think, there are reward cards available even to the higher risk band of customers. This type of credit building card offers what is known as introductory rate. For a limited period of time your interest rate will be extremely low thus encouraging you to spend more. There might be even some extra reward schemes and no fee cash advances available. Remember, it is only a temporary offer and after a while it will eventually come to an end with credit card companies reviewing and increasing your rates. While it gives you a chance to build up your rating, it can equally pose a huge risk if you are a big spender. Read your terms and conditions and stay on top of your budget all the time.
Another type of a credit building card is a pre-paid credit card. This product gives you all the convenience of a regular credit card but won't let you spend over the amount deposited. For the obvious reason there are no interest charges. Nonetheless, fees are charged when you top up your card and you may also be charged for not depositing money after a particular duration. It is an ideal choice for anyone with uncontrollable spending habits and definite must-have if an introductory card is off-limits to you.
Once you have established a good credit rating with your first card, possibilities will open up for you. Start building your credit history today and you'll reap the benefits for years to come.
