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Clear & Simple Home > Students > Selecting a Credit Card
Selecting a Credit Card**
A credit card can be an incredibly useful financial tool -- so long as you
use it wisely. Here are a few ways a card can be of use:
Building good credit
You buy things, and then you pay for them -- it's really a simple
concept. No matter what anyone tells you, the best way to build good
credit is to pay your card off every month, in full. If you're doing
this, high interest rates won't matter, since you won't be paying interest
anyway.
For convenience
Having a credit card is much easier and safer than carrying large amounts of
cash with you. If you plan to pay the balance in full every month, look
for a card with no annual fee and a 20- to 30-day grace period. You
might, however, opt to get a debit card attached to your checking
account. It won't allow you to build credit, but it won't allow you to
build debt either.
For the freebies
Some cards allow you to build points with every purchase towards free
merchandise or airline miles. Be aware that some of these cards have a large annual fee and a high interest rate. You might be better off buying
whatever freebie you're trying to earn.
To carry a balance
Like we said, it's not a good idea to carry a balance on a credit
card. But if you've already got one, find a card with a low interest
rate, then see what the annual fee is and how much they charge for balance
transfers. Then figure out how much you will save in interest using the
Cost of Credit Calculator. If you can save more in interest than you pay
in fees, it's a good deal. If not, keep looking. Either way, pay
off that card. Soon. Today, if possible. Because if you
don't, you're digging yourself into a deep, deep hole.
**Content courtesy of Visa's What's My Score program. |
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