* Introduction to credit cards
Most people try to avoid credit cards because they feel like they are putting themselves in debt. To a sense you are, especially if you tend to max them out without the money in your pocket to easily cover them. Other people, however, will use credit cards as a way to build a line of credit which can later be used on getting home or vehicle loans, (or just loans in general). Buying a house is difficult if you don’t have credit established, and especially if you have a low credit score because of early mistakes you didn’t rectify soon enough. So, why should you use one, and how?
* What type of credit card should you get?
Well, first things first, if you plan to get a credit card you should get one that has rewards. Rewards cards are going to help you make a little money while you’re spending money, and it’s all based off of how much you spend and how quickly. Most of the time, people get credit cards because they have a specific use for them at that time. If you are maxing it out quickly, (or spending a lot of money), a lot of cards will reward you for doing so. In addition to that, the first few months have a lower interest rate, up to a year or two for most cards.
* Which credit card company is the best.
As for which company is the best, (and which company you’ll be able to get a card with), that depends on your credit history, and how old you are at the time. If you are just turning eighteen years old, you’ll notice that the only card most likely available to you is a secured credit card. A lot of people dislike secured cards, because they have to deposit money in order to actually get one. This is unfortunately not something that you can avoid, unless you have someone cosign with you.
* What is cosigning?
Which brings us to the option of having someone cosign for you / cosigning for someone else. Often what credit card companies will do is allow you to have someone who has more “worldly experience”, (aka someone who has better credit than you), and put the card in both of your names. This means that the company will recognize you as the owner, but if you fail to make a payment, they look to the secondary owner to pay up. In most cases, this works out fine for both parties.
* The risks of cosigning for someone.
The thing with cosigning for a credit card is that it is always a risk, as you are trusting someone with your finances. There are no ifs, ands or buts. If the person who is responsible for the card for some reason can’t or doesn’t pay off the card, the secondary owner is left with the debt and payments. This is not the case for a person who cosigned on a card with someone who later became deceased. In most cases the company will allow you to get out of the debt, but lots of paperwork is involved, and it’s not always guaranteed.