Getting your first credit card is one of several steps towards financial independence. In addition, there are a number of benefits to having a credit card. If you take it seriously, it can help you to build a good credit rating. It’s also a helpful tool to have in the case of an emergency. However, simply being old enough to apply for a credit card doesn’t always mean you actually need one. A credit card can be a big responsibility. Not only will you have to ensure that you can repay the money that you spend, you’ll also have to take the initiative to pay your bill once a month. If not, you risk causing lasting damage to your credit, something that can harm you significantly in the future. The following information can help you to prepare for your first credit card.

Getting Approved

If you’re under the age of twenty-one, you may have difficulty just getting approved for your first credit card. You must have a provable source of regular income – and an allowance from your parents doesn’t count, it has to be income from legal work. But even if you do work, you may still have trouble getting approved if you only work part-time. Banks want to verify that you’ll be able to pay back your balance and having low income isn’t particularly reassuring, even if they know you’re still in school. If you can’t get approved, you can opt for a joint credit card account with a co-signer, ideally a parent.

Compare Interest Rates

For your first credit card, you will want to go with one that has a low interest rate. This is important, because otherwise it will cost you. Instead of opting for the credit card offered on your campus or by the banking institution you’re already with, spend some time comparing interest rates online. There are some great websites out there to help you compare, including CreditCards.com and Bankrate.

Keep a Low Credit Limit

While this may sound like a drag, it’s for your own good. While most credit limits start between $500 and $1,000 USD, especially for a first-time cardholder, you might want to try to stick to the lower end of the range, at least until you become accustomed to having a credit card and regularly paying your balance.

Some banks offer credit cards that send you spending alerts when you’re approaching your limit. Prepaid cards are also a good idea to stop yourself from overspending.

Pay Your Bill Right Away

In order to avoid getting into debt, you should try to pay off your entire balance every month. You will notice that the minimum payment each month is actually quite low. Don’t be fooled by this figure – banks accept low monthly payments because it means more interest payments in their pockets. When you don’t pay off your balance right away, you will notice that interest can accumulate quite quickly. If you don’t want to pay extra, pay right away. If you can’t pay right away, do so as soon as feasibly possible. Consider leaving your card out of your wallet until you can pay it off in full. Otherwise, debt can start to pile up and interest payments are likely the last thing you want to be spending your money on.