5 Questions to Help You Decide Whether to Open a Credit Card
Technically, you can get a credit card at age 18 if the credit card issuer approves your application, of course. But whether you should get a credit card is an entirely different question. And it’s one that everyone should answer regardless of age and the number of credit cards already owned. Before you apply for a credit card, ask yourself a few questions to be sure it’s a good idea.
Can you get one without a cosigner?
Forget about getting a credit card on your own if you’re under age 18, even if you have a job. And if you’re under age 21, the credit card issuer will require you to have a cosigner if you don’t have income of your own. People with bad credit or limited income often need cosigners, too. Getting a credit card with another person can lead to trouble down the line, not just with the credit card, but with your relationship, too.
Can you afford to pay back a credit card balance?
Not only do credit card issuers require you to have steady income of your own (household income no longer counts), you need to have enough income to repay a credit card balance.
Credit card issuers ask for your salary and monthly mortgage or rent payments to decide whether you can afford a credit card. However, your housing cost isn’t the only factor that affects your ability to repay a credit card balance. Use your monthly budget to give you more insight into whether you can afford a credit card. If you’re barely making ends meet now, adding a credit card balance will stress your income even more.
Do you have enough credit cards already?
Unfortunately, I can’t tell you exactly how many credit cards you should have because there’s no such number. The maximum number of credit cards varies from person to person. Some people can’t manage one credit card while others manage dozens.
Consider how you’re managing the credit cards you already have. Can you keep up with your payments? Is your credit utilization high? If you’re not handling your current credit cards well, you definitely don’t need another one.
Does the credit card have good terms?
If you have a specific credit card in mind, read the credit card disclosure to discover credit card pricing. Some credit cards are overpriced, but it’s sometimes hard to tell unless you compare a few different credit cards in the same category.
Considering a rewards credit card? Read the terms and conditions of the rewards program thoroughly. Some rewards programs have tiered rewards and minimum redemption amounts that make the rewards less attractive. Remember that card issuers can change reward programs at any time.
We’ve reviewed dozens of credit cards here. You can use those reviews to get some perspective on whether the card you’re considering is a good or bad choice. Once you look at a few credit cards, it’s easier to judge whether a card has good or bad pricing.
Have you recovered from any past credit mistakes?
It’s tougher to get a credit card after a bout with bad credit or after completing bankruptcy. If you haven’t shaken the bad habits that initially led to credit and debt problems, it’s best to wait a few more months. After you’ve come to terms with what caused your problems and you’ve changed your bad habits, you may be ready to get credit again.
Give it a trial run, perhaps three or six months to see how things go. But, have enough self-discipline to close out the account if you’re not handling it well, e.g. not paying your balance in full or charging more than you can afford to repay.
The Verdict
There are people who believe credit cards are bad and that they only cause problems. But, that’s like saying that over-the-counter pain medication is bad. Anything can be abused. It’s up to the cardholder – you – to use the credit card responsibly and stay out of trouble. If you’ve answered yes to all these questions, then you’re ok to get the credit card. Be sure to charge only what you can afford and pay your balance on time and in full every month.