It seems as soon as a person becomes an adult, they need credit, whether to get an apartment or a student loan. Using pre approved credit cards is a great way to build that credit history. Having poor credit can affect areas of your life that you probably haven’t even considered, including your ability to get a job and even your insurance rates. Your credit will follow you throughout your life, so building and maintaining a good credit history is crucial to your future success. However, by not paying attention to the terms of the card you use, you could end up overpaying in the long run.
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For people who haven’t really examined a credit card offer, it’s useful to know what to look for. All offers should list the terms in a convenient location. This is often on the back of the offer and may be listed in a box as terms and conditions. The terms of your pre approved credit cards should include the annual percentage rate or APR, the grace period, late and overdraft fees and any applicable annual fees associated with the card. The APR is generally going to be the most important item on this list. This lets you know what you will pay in interest in the event that your balance carries over from month to month. Paying off your balance every month is a great idea, but keep that percentage rate as low as possible, just in case. Read the fine print carefully, as some cards will start out with an extremely low interest rate and then after an introductory period, raise the rate exponentially. Stay away from this bait and switch type of thing. Also steer clear of cards that have any sort of annual fee. There are plenty of cards available that are fee free, so use those instead.
After you have your credit card, make sure that you manage it well. Young people who are just taking on adult responsibility are especially prone to mismanaging credit. Your record will follow you for years and cleaning up poor credit is much harder than managing your money well in the first place. Use your pre approved credit cards as a tool, not a crutch. The best approach is to sit down and examine your finances and make a budget. Shoot to pay off your balance in full each month. If you have to carry a balance to the next month, budget it in. Your credit card is the foundation of your ability to do more with your money, so don’t abuse it, as tempting as it may seem.
By properly managing your money, you can build a strong and solid credit history. Pre approved credit cards are a fantastic tool to help you create a record of responsibility. Look for the best terms you can find and manage your money well. In the end, you will have built excellent credit that will help you throughout your life.
