5 Things to look out for when getting a Credit Card

A couple of weeks ago, I got a message from my brother asking what he needed to know when getting his first credit card. I decided to write about it for other people like him to help guide them into getting the best credit card for themselves.

Things you need to know before getting a credit card

A Credit Card is not FREE MONEY! Do not use it like it’s free money. You are giving a credit limit in good faith to pay back the amount you use monthly, which helps build your credit profile and score. If you use your credit card irresponsibly, you see the impact on your credit score, and that’s something you don’t want.

Let’s get into it.

Interest Rates

The first thing you need to know is that credit cards generally have a higher interest rate than other forms of credit. When choosing your credit card, choose a lower interest rate card if, based on your financial situation, you may carry a balance regularly. On the other hand, if you always pay your balance monthly, the interest rates may not matter to you. I do not recommend holding a balance on your credit card no matter your financial situation, and one rule of thumb to help out is to use your credit card when you have the money in your checking account. 

Annual Fees

The next thing is annual fees. If you are getting your first credit card, I recommend a no-fee credit card, and there is a lot out there with great benefits. My first credit card was the Scotiabank Scene card, which I enjoyed using because I got to stack up my scene points during COVID and watched many movies after the lockdown.

If you get one with fees, ensure you do the math and it makes sense!

Rewards/Benefits

Another thing you have to check is the rewards the credit card offers. Credit card rewards are not the same, so pick the card with the rewards you benefit from the most. While I was in school, getting scene points made more sense to me. When I started working, I preferred a cashback reward card and, when I was entering my travel era, I needed a card with great travel rewards. Always pick the credit card or credit cards with the best rewards for your situation and season in life.

Card Requirements

Something that’s often forgotten is the eligibility criteria for a credit card, you may want a particular credit card but not be eligible for it. You don’t want to apply for a credit card without educating yourself on the requirements. If not, you end up losing some points from your credit score. Applying for a credit card involves a hard check/inquiry which reduces your credit score. Don’t apply ignorantly.

Shop Around

To find the perfect credit card for your financial situation and wants, you should shop around. Do a lot of research and see what the big banks are offering vs the digital banks. Shop around to get the best credit card for your situation!