Are You Ready for a Credit Card?

Depending on who you talk to, the words, "credit card" mean one of two things: "danger zone" or "freedom, baby!" Having a credit card is both a blessing and a curse. Yes, it can encourage you to spend a little more freely without having to feel the burn right away, but it can also give you a rude awakening when you receive your monthly bill.

Let's take it back to 1920s America. It was the era of flappers, great jazz, and modern-day conveniences, like movies and cars. More leisure time and new financing options like generous bank loans and buying on credit, made people spend well beyond their means. For nearly a decade, everyone was buying like crazy. But unfortunately, that came to a tragic halt in October of 1929. Bummer.

Since then, the United States has ebbed and flowed in moments of economic prosperity and recession. But one practice that all Americans can do is establish responsibility with their credit. And responsibility is not necessarily something that everyone has once they turn eighteen and can legally apply for a credit card.

To qualify for a credit card, you must have a steady source of income that will prove to your bank that you can pay your bills on time and not drown in credit card debt. If you're so inclined to start early, there are special student or retail credit cards that may have easier qualifications. (Yes, you can still apply for a credit card if you have no credit.)

The most important thing to understand when you apply for a credit card is that it gives you a high risk of debt. But, if you are able to pay your bills on time, you can build your credit and qualify for greater purchases down the line. You'll have to have a strong credit score to buy a house, apply for a mortgage, or even to seek employment in certain domains. You can achieve this by starting off strong. Know your limitations by crafting a thoughtful budget. Here's a great budgeting resource to get you started.

While debit cards take money out immediately from your account, they don't help you build credit. To see if you're ready to pay a monthly credit card bill, total up all of your expenses month to month, and find the average. Then, see if you can save that amount every month. But the best way to get started is to find out as much information as you can. If you think you're ready for a credit card, then you need to figure out which card will be best for you.

Are you ready? Put your credit card knowledge to the test with this quiz!

PayPath
Follow Us on
Photo by Arlington Research-Unsplash

You’re powering through your morning. You’re in the zone. Getting so much done. But then you get Slacked with an innocent question: “Gotta moment to discuss the Jefferson thing?”

Keep readingShow less

Ever since the pandemic popularized (or forced) virtual meetings and, countless companies adopted the hybrid work model or went completely virtual. And once the public health crisis was declared over, we remained confined to our desks in our kitchens and attics working from home.

Keep readingShow less

April 18 came and your taxes were not ready. So you filed a tax extension. Well, you should file an extension, if you haven't already. Form 4868 is one of easier tax forms to fill out and it will give you an extra six months to get your taxes together. Everyone is eligible for a tax extension. The extension gives you until October 17 to file your taxes, but keep in mind if you owe the IRS money; it is still due April 18. Once you've filed an extension, what happens next?

Keep readingShow less