Basic Guide to Understanding Credit Cards

Your first credit card can make or break your credit score. It can also set you up for a path of really good or destructive spending habits. Lets eliminate any worries, stress, and anxiety regarding credit cards and learn the basics together.



Contrary to what many people say getting your first credit card is not always the easiest task when you're 16.


Your score will not magically boost to 800 the way memes on social media joke.

And your credit score can matter a lot down the line.


Keep reading to find out what you should know before you get your first (or next credit card), and a few healthy spending habits to boost your credit easy and fast.


Table of Contents

Define Credit Card:

Types of credit cards

Tips for managing

Building credit tips

Vocabulary words you should know


What is a credit card?


A credit card is a form of borrowed money. You use it in a store by swiping or putting the information in online the same way that you do with a debit card. The major difference is that one (debit) has money that you have earned in some way or were given, and a credit card can have a limit bigger than the actual amount you can afford to spend.


Should I have a credit card?


It depends. Use the road map below to get a better idea. A steady reliable income, financial literacy and a mindset shift can give you the power to credit card spending.


If you ask Dave Ramsey you would be convinced that you don't need one to boost your credit and from what I've learned of his reasoning I can understand.


Consider why you want one


There are apartments that will accept your application based on annual income and not your credit score. Also when you budget and bargain hunt for a car or any other expensive item or gift you may end up paying for it in cash, without your credit score being checked.





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Another common question is always what kind of credit card you should get


Student Credit Card -


Given to students who are in a college or university, it is assumed that the individuals applying don't have much a credit score.


Usually beginners to the world of credit and since the credit companies are taking a risk with allowing students to open an account, there are some pros and cons to opening a student card.


Benefits -


It's reported on your credit score and has the ability to work in favor of boosting your credit.


It allows you to be accepted for a card even if your score is low at the moment.


In the long term when it comes time to aim toward bigger goals like buying an apartment, saving for vacations, or beginning a new path in life, you'll have a credit score to fall back on.


Cons of a student credit card


They often have smaller credit limits.


This can lead to frustration because it's not enough to buy things that college students usually need like books, supplies, technology, or even tuition.


The interest charged is also a lot higher than it would be on a secured or unsecured credit card because the companies want to ensure they are reimbursed for allowing you to open a card.


Fees for international spending or cash back can also be higher.


And similar to a secured and unsecured cards, not making at least the minimum payments can be reported and drop your score.


Secured Credit Card -


With this type of card you place a deposit and that amount is used to approve you for the card.


The deposit can also be your credit limit.

An example of a credit card would be the CITI Secured card where the minimum amount that can be deposited is $200.


After a certain amount of time (Sometimes 18 months) the credit card company may offer you back your deposit as well, which makes the downpayment only a temporary investment.


Benefits of a secured credit card.


It limits the amount of debt you can get into.


If you use the card as something that can boost your credit, but not give you access to extra funds, having a card with a $200 limit is useful.


1. It goes on your credit report


2. It counts as a revolving form of credit. <