Credit card is considered one of the best ways to accumulate wealth and finance important purchases. Many come with additional benefits such as the opportunity to earn a couple miles or cash back. However, one must take a minute to keep in mind whether or not it is the correct time to incorporate a new card to the wallet before application.
A large number of individuals open credit card for the first time at the age of 18 to establish a proper credit history while others opt for a new card when they have to take a trip abroad or earn some lucrative rewards.
But there are many alternative means to build credit. Take a substantial amount of time to analyze the reason for opening an extra credit card as the more one has, there is more to keep track of – starting from due dates to statement balances.
When to Open a Credit Card?
If you wish to open credit cards, mentioned below are few optimal times to apply:
- One Turns 18
Credit cards need one to be at least eighteen years to open their account, making it the perfect time to get cards. Opening credit card at eighteen enables one to get a jumpstart on building credit so they can have an amazing credit history sooner. One has to have a stable income for qualifying.
- One Have Great Credit
If one’s credit is in proper standing, meaning they have a score of at least 670 or more, they are in a strong position to apply and get approval. They also have the chance to make the most out of this situation.
- One Want to Rebuild Credit
If one does not have credit history at all or a poor credit, opening an account can let you escalate the score to a great extent. Secured cards can be the perfect option and provide lenient credit needs compared to the unsecured cards.
When to Not Open a Credit Card?
Although credit cards can be an excellent asset, they are not the best option specifically under the below-mentioned circumstances:
- One Spends Above their Means
While the line of credit can be beneficial, it can be a great risk for individuals who spend more than they can actually afford to repay. It is difficult to restrict the card spending compared to cash transactions or debt card since one does not have the money at the time of the purchase. If one overspends and do not pay their bill in full, they can fall into costly debts.
- One Lost their Job
The card issuers take into account their income when deciding their approval chances and an alleviate income can impact their capacity to qualify for cards since it shows one has limited funds to repay the debt. If one applies for card with negligible income, they may be denied approval and their scores will drop.
At the end, getting credit cards can build wealth bit it may also hurt one’s scores – it depends ultimately on individual situations. Such a huge decision must not be made based on the exclusive card design or welcome bonus. It is based on one’s current capacity to repay the charges and the impact it can have on finances.
