Getting your first credit card is a time honored event where you are establishing your financial independence. That time in your life when you are accepting financial responsibility.
However many credit issuers view you during this time with the biggest and most profitable bulls-eye on your back! You are who EVERY credit card issuer wants to give credit to.
Why?
Brand loyalty, ignorance of how the credit system works. In other words, you can be bilked for every penny without questioning the system, and of course the high likely hood that you will over extend yourself and only pay minimum payments for the next 5 years.
I don’t want to waste your time and give you yet another “financial responsibility” speech. What I do want to do is point out is that in today’s economic world you must have a piece of plastic with a Visa or MasterCard logo on it.
The days of living with just cash are over. Without a major credit card you can not; rent a car, make purchases online, buy gas at the pump, make purchases over the phone …
However getting a credit card for the first time has become much more difficult in our current economic conditions. The banks have made it much more difficult to get approved. You must actually have some credit meaning have made payments on a purchase in your name.
Assuming you do qualify you will likely be extended a credit card with a limit of around $300 – $500 and you will be responsible to pay roughly 18% APR – this is very high and a very low credit limit.
Unfortunately with credit cards they don’t really work the same as with other purchases where you can have a co-signer. With credit cards instead your parents could make you an authorized user on their account, but this will not help you build credit and requires A LOT of trust!
Instead we suggest you get a prepaid debit card. This is not a credit card. You will not have monthly payments to make but instead will only be able to spend money you have already deposited in your account.
You will not be responsible for paying any APR %, there is no minimum deposit, no late fees, no monthly payments, no over the limit fees. The only person that knows it’s a prepaid card is you!
It will still have a Visa or MasterCard logo on it and you will be able to make all the same purchases with it as if you had an unsecured credit card for people with no credit. This completely eliminates the possibility of going in debt.
Instead we suggest you ask for a co-signer on an Apartment, cell phone (in your name), Automobile … paying these monthly bills will help to establish some credit for you and then when you have some credit you can go and get an unsecured credit card with a low APR % and a high credit limit.
