I got my first credit card at age eighteen. I was a high school senior. I’d just been accepted into college, and the world was my goddamn oyster (but slightly less like salty snot). The year was 2005… and getting that shiny little piece of plastic was just about as easy as putting out my hand and asking for it.
Times have changed. We now live in a post-2008 Recession world, and getting your first credit card has become markedly harder. This is probably why we constantly receive questions from eighteen-year-olds like “I’ve submitted nine applications and no one will give me a credit card. What do???”
The Ramseyan debt purists will say “Do without it, you fool!” But we believe a credit card can be an extremely useful weapon in your financial arsenal. Just look at what happened when Kitty and her boyfriend tried to rent an apartment together and couldn’t because he had no credit!
For while using a credit card is certainly not the only way to build good credit, it is one of the easiest.
What the hell is a credit card?
There are essentially two ways of paying for things:
- Dolla’ dolla’ bills, y’all
I know I don’t have to explain cash to you. For you are a strong, independent person of indeterminate gender who has probably used a vending machine at some point in their life.
But credit is a trickier beast. A buddy of mine used to refer to it as “free money” in our college days. As in, the check would come and he’d throw down his credit card and say, “Who cares? It’s free money!”
(NOTE: My friend was severely misrepresenting the concept of credit. Do not emulate his behavior. Though I do appreciate him buying so many rounds at the bar.)
Credit is made even more confusing because the word itself is used in so many ways, financially speaking.
There’s your credit report and credit score, which we explain here. Both of these are sometimes vaguely referred to as your “credit.” So when people say things like “I have no credit”/”I have bad credit”/”I have great credit,” they’re usually talking about their credit score. Seriously, go read this article on credit scores first. I worked really hard on it and none of this makes sense without it.
Credit can also symbolize a monetary value. That’s the definition we’ll be dealing with for the rest of the article.
How a credit card works
When you apply for a credit card (CC, “the keys to the kingdom,” or even just “card”), what you’re actually doing is applying for a line of credit with a bank or financial institution. A line of credit is a certain amount of money you can borrow from that bank at any time. The card is essentially just the key to unlocking that line of credit.
If you get a CC with a $2,000 limit on its line of credit, for example, what that means is you can use that CC to spend up to $2,000 on whatever you want. If you reach that $2,000 limit, you won’t be able to use the card again until you’ve paid back some of the money.
You can use the CC as often as you want as long as you keep paying back the money. Spend $100 one month without paying it off, and you’ll still have $1,900 left you can spend on your line of credit. Pay back that $100, and you’ll be able to spend up to $2,000 again.
Whether you use the credit card or not, that $2,000 credit limit will always be available to you should you want it. In this way, it’s known as a revolving line of credit: it “revolves” eternally as long as you never owe more than the limit.
Just remember: that line of credit isn’t “fake money” or even “free money.” It’s money you’ve borrowed and have to pay back… with interest.
Why a credit card is useful
A credit card can be a useful financial tool because it can help you build a good credit score.
If you use less than the maximum limit on your CC, and if you pay off the money owed on the card in full and on time, you’re showing yourself to be a solid money manager. You’re proving your responsibility, your trustworthiness, and most importantly, your creditworthiness. (Creditworthiness: an inherently biased concept that perpetuates the wealth gap and economic discrimination. But that’s a topic for another day.)
Wisely using a CC can really help you improve your credit score, or build one in the first place! And having a good credit score is useful for all kinds of reasons. This is why so many people want a first credit card.
A CC can also be a convenient safety valve if you need it. Kitty actually uses her credit card as an emergency fund. While this is a tactic reserved for Level 12 Financial Paladins and above, it’s still a valid use!
First, get a secured credit card
If you’re a brand new baby bitch and you don’t have a lick of credit to your name, it can be especially hard to get a first credit card. This is because the whole concept of a credit score is a way to prove your financial responsibility and trustworthiness. Your credit score is roughly an indicator of whether or not you are to be trusted with credit. (Again: this is SUCH A FUCKED UP SYSTEM but I seriously do not have time to squeeze that problem into today’s article so kindly bear with me.)
Creditors (including those who hand out credit cards) will decide to give you a CC based on your credit score. So if you don’t have a credit score, or if you have a terrible credit score… nobody’s going to give you that sweet, sweet plastic.
It’s a bit of a Catch-22. You need good credit to get a CC. But one of the fastest and easiest ways to build good credit is with a CC. And meanwhile Colonel Cathcart is raising the number of missions you need to fly and your goal of going home in one piece is slipping steadily out of reach!
If only there were some way to secure your card first…
Enter the secured credit card. It works like a regular CC, but in reverse. Instead of getting a line of credit you pay off after you’ve spent the money, you give the bank money before you use the card.
Think of it as a prepaid credit card. If you need a $200 credit limit, you give the bank $200, they give you the secured credit card, and you go use the card to buy things.
Your secured credit card is “secure” because it is backed by that $200 deposit you made with the bank. If you fail to pay off your CC bill, the bank can just keep that $200 deposit you made. They’re not embracing the same amount of risk they would if it was a normal credit card.
Meanwhile, every time you use your secured credit card, you’re building up a good credit score. And that nascent score is proving you to be responsible and trustworthy with credit. After a period of time, you’ll be able to graduate from Baby’s First Credit Card to a Big Kid Credit Card!
Then, get a real credit card
Once you’ve graduated from secured credit card to Big Kid Credit Card™, you have a number of factors to consider. Don’t just choose the first card that comes your way!
When you’re a creditworthy human, banks will beat down your door to try to offer you credit cards. You’ll get “preapproved” CC applications in the mail. You might even be bombarded with ads. IGNORE THESE.
Think of yourself as the most eligible bachelor at the ball. Prince fucking Charming isn’t going to just marry the first girl presented to him by her power-grasping, aristocratic parents! He’s going to dance with a bunch of them, stare deep into their souls, and evaluate their APR before putting a glass slipper on it.
Consider the APR
Annual Percentage Rate (APR) is the interest rate on the credit card.
That’s right: you don’t get this revolving line of credit without a catch. If you don’t pay your CC bill in full and on time, you’ll accrue interest for every month you carry a balance on the card. And while it might not be much at first, it can add up.
Here’s more on how to responsibly and wisely use your first credit card:
- The Best Way To Pay off Credit Card Debt: From the Snowball To the Avalanche
- Let’s End This Damaging Misconception About Credit Cards
- Dafuq Is Credit and How Do You Bend It to Your Will?
- How to Build Good Credit Without Going Into Debt
- How to Instantly Increase Your Credit Score…For Free
This is why you want to compare cards to get the lowest possible interest rate. Ideally, you’ll use that card responsibly and never pay a dime of interest! But if you find yourself in dire financial straits, or an emergency comes up, or if you just plain forget to pay your bills, you don’t want to have to pay more than absolutely necessary in interest.
Consider the fees
Some credit cards come with annual or monthly fees. Some don’t! But those that come with fees generally also come with pretty sweet rewards (see the next section).
Think about how you’re going to use your CC before deciding what kind of fees are acceptable to you.
If you plan to use the card sparingly, or only in emergencies, then it makes sense to get a card with low or no fees and, conversely, little to no rewards.
If you want to milk that credit card for rewards, then you’ll probably have to put up with some fees. Determine how much is acceptable to you based on your card usage, and weigh it against the rewards.
Consider the rewards
If you’re paying a fee for your credit card, you better be getting some pretty sweet rewards out of the deal.
One form of credit card reward is cash back. This means the CC company will reward you with free money (literally, this time) the more you use the card. You can then use that money to basically erase money spent on the card. Pretty sweet, right? But again: you have to balance the cash back reward to the annual fee and make sure the math works out in your favor.
Another reward common to credit cards is travel points. Essentially, every time you use the card you earn points that have a monetary value toward travel—plane tickets, hotel rooms, car rentals, etc. This is a great rewards system if you travel frequently or if you’re trying to save up for a big trip.
But again, you need to weigh the rewards against the fee. For example, my Capital One Venture card comes with an annual fee… but it also racks up travel points like nobody’s business. And given how often my husband and I like to travel, that fee is absolutely worth it.
We literally went to Portugal for free because of our credit card rewards. And my friends… the wine was divine.
Consider the customer service
Here at Bitches Get Riches, we strongly believe in rewarding good behavior and punishing bad. And that means annihilating customer service that doesn’t treat us like the queens we are.
You deserve to be treated with respect. Full stop. If a credit card company’s customer service is inadequate, or downright frustrating and unhelpful—don’t work with them! If their website is so mind-bogglingly difficult to navigate that it leaves you grouchy and cursing, don’t give them your business.
Not all customer service is created equal. Read unbiased customer reviews, and decide on a credit card accordingly.
Sound off, Bitch Nation! What factors do you take into account before getting a credit card? Extra credit if you tell us about your favorite credit card!