I’m a credit cards editor, and for most of my life, I was afraid of credit cards.
Most people agree it can be a good thing to have a healthy dose of unease when it comes to credit cards. Used irresponsibly, they can harm your creditworthiness and make it challenging to finance a new car, initiate a new mortgage or be approved for a life-altering loan. And no one wants that.
But there’s a flip side, too. Being completely afraid of them can also hinder your finances in the long run.
Growing up, I watched as friends rushed to sign up for store credit cards, only to later regret them, and as family members anguished over their tanking credit scores. Why would I ever want one for myself?
I was determined to stick to my safe, dependable debit card for good until I realized it wasn’t serving me the way I thought.
Why I finally admitted I needed a credit card
Recently, I was traveling alone to Syracuse to visit my brother in upstate New York. I needed a rental car to reach his school campus, and found myself standing in the airport Hertz line, hoping they would let me rent my first car even though I wasn’t quite 25 years old. As I made my way to the front, I was told they needed to put a security deposit down on my credit card. I froze. I only had a debit card and (to my horror) discovered that it would cost over double to use that card instead. All my weekend spending money was now in the hands of the invisible Hertz holding cell.
That moment was when I realized having a credit card — even one I only used for renting cars or hotel rooms — would be necessary. Out of fear, I had refused to open one for so long, but the reality was that I was making my travel experiences far more inconvenient and pricey than they needed to be. Plus, I realized I was tired of feeling ignorant about my own finances.
It was then I decided to educate myself on the world of credit cards and how to use them responsibly.
6 things I learned while opening up my first credit card
Diving into credit card research was intimidating at first, but the more I learned, the more I realized they weren’t as scary as I’d imagined. By the time I finally applied for my first card, I felt more in control of my financial journey than I ever had before, and hopefully, you can too.
Here’s what I learned:
1. Tackle the terminology
Learning credit card terminology is the first step to fully understanding how credit cards work and how to best use one. Credit cards can be complex, and the fine print can have you running — but understating the terms that come with your card will make using it responsibly much easier.
Here are just some of the credit card basics I learned:
- Most cards come with a credit limit, which is the maximum amount of credit you can charge to the card.
- Each card has a specific APR, or annual percentage rate, which is the amount of interest charged at the end of each billing cycle. This can be either fixed or variable.
- A billing cycle is about 30 days.
- There are several different types of credit cards, all with unique perks and benefits for the cardholder.
Before applying for a new card, make sure you feel knowledgeable about what credit cards are, how they function and why they’re such powerful financial tools.
2. Determine what matters most to you
Next, I discovered that becoming an expert on you is one of the most critical steps to finding the right credit card. Because each card comes with certain benefits, you will want to ensure the one you choose enhances your spending style, and not the other way around.
For example, to determine which categories I spent the most on, I reviewed my debit card spending history to assess where my money was going. Turns out, I spend most of my money on bills, groceries and dining out. I realized then that I would most likely want a credit card that earned points or cash back at supermarkets and restaurants, specifically.
However, not all new cardholders may want a rewards credit card right away. Secured credit cards offer a straightforward option that allows holders to establish good habits and build their credit scores without any distractions.
As you compare credit cards, it’s essential to first determine what card type would benefit your lifestyle, business or family.
3. Credit card rewards are the most exciting part
The very reason I used to love my debit card became the reason I realized I needed a change: debit cards are very straightforward.
Credit cards, on the other hand, can offer exciting rewards, benefits and unique welcome offers that cardmembers can enjoy. Early into my research, I realized I wasn’t getting anything back by spending money only with my debit card.
Rewards cards come in many different forms and are no doubt one of the most exciting aspects of credit. Cash back cards offer a percentage of cash back that you can earn on purchases in specific categories, although some offer a flat rate which can apply to all purchases. Other cards reward their members with points or miles that can then be redeemed for travel purchases, gift cards, merchandise and more. Miles-earning travel cards can allow you to transfer your miles to eligible travel partners, which can often enhance your travel experience.
I quickly realized I love the possibility of converting my points into flight tickets, hotel stays, gift cards and more. My old debit card definitely couldn’t do that.
4. CardMatch™ can provide you with personalized card options
Finding the right card for you can be a tricky business. During my research, I discovered that there are many tools available to help determine which credit cards fit your spending habits best, and I loved using Bankrate’s CardMatch™ tool. These types of tools perform soft credit inquiries on your credit score to determine your chances of qualifying for specific cards. They can also compare and contrast any cards you may be considering.
A large part of my research into credit cards was spent comparing card options. Did it make more sense for me to apply for the Bank of America® Customized Cash Rewards credit card and earn 2 percent back at grocery stores, but have to deal with the hassle of revolving categories? Or should I consider the Chase Sapphire Preferred® Card, which earns 3X points on all dining and online shopping purchases?
And most importantly — would I be approved for these cards in the first place? Thankfully, the CardMatch tool could determine my odds of being approved for certain cards without any hit on my credit score.
5. Credit cards are meant to be paired
One of the most fascinating things I learned while researching was that credit cards are not designed to be used alone in the long run. In fact, there is no such thing as a credit card that covers every type of reward category, intro APR offer and welcome bonus. Because each is tailored to a certain purpose, it’s often wise to have multiple to cover all your spending needs. Some of the best credit card experts pair multiple credit cards to cover every spending category.
Even as I excitedly applied for my first credit card, I knew it could only do so much. Other prospective cards I may one day incorporate into my larger card strategy include the Chase Sapphire Preferred as a strong travel card, the Citi Double Cash® Card for flat cash back rates, or the Capital One SavorOne Cash Rewards Credit Card for excellent rewards on entertainment purchases.
6. Still nervous? Credit cards have more protections than debit
If still have questions about credit cards vs. debit cards, keep in mind that credit cards offer far more protection for their cardholders. Losing a card or having its information stolen at a gas pump can cause your finances to come to a grinding halt if you have a debit card. It can take weeks to receive a new one, and debit cardholders are often more liable to repay any charges made to their card than credit cards, thanks to the Credit CARD Act of 2009.
If you still have fear around using a credit card, just know that it not only offers more flexibility than debit, but legally, it also protects its cardmembers far more. The purchase protections in place ensure a more seamless spending experience every time you hand a merchant your plastic.
The credit card I chose and why
So, which card did I end up choosing? After weeks of research and comparing credit cards, I applied for the American Express® Gold Card. Thanks to some very lucky timing, Amex was promoting a limited-time intro offer of 100,000 points after spending $6,000 within the first six months of opening an account, and I knew I had to take advantage of this substantial bonus while I could.
Besides the intro offer, this card just makes sense for me. As a young adult living in Cincinnati, I dine with friends and order take-out quite often on a weekly basis. Plus, I almost exclusively buy my groceries at eligible supermarkets, such as Kroger and Aldi, so using a credit card that earns 4X points at restaurants worldwide and U.S. supermarkets will come naturally.
Additionally, as someone who travels often, earning 3X points on flights booked directly with airlines or at Amex.com and 2X points on prepaid hotels was not a perk I was about to dismiss. Plus, Amex Membership Rewards points are transferable to Delta Airlines, and Cincinnati is an unofficial Delta hub, making my cost of flying oh-so-much cheaper.
The bottom line
I’ve come a long way since standing at that Hertz counter with only a debit card in hand, terrified I wouldn’t be approved for a rental car. But being afraid of credit cards isn’t much more beneficial than using them irresponsibly, in the long run. Tackling my fear and learning how to best use credit cards has opened the doors of opportunity, and I can’t wait to see where my new credit savvy is going to take me, as it can for you, too.
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