So, I’m 21 years old and I just finished my studies and I don’t have a credit card. Now I have gone to verify my credit score and it is much lower than I had anticipated. This was a shock to me, since I thought I had no reason to have a low score, I had never taken out a loan or a credit card and, therefore, I never delayed any payment. For the past month or so, I have been researching ways to build and maintain my credit score and this is what I found.
For starters, I didn’t even know there was more than one type of card! Learning about the different types of cards allowed me to segment them into 2 categories of cards and they are;
- standard credit cards
- reward program cards.
Balance Transfer Cards
Balance transfer cards allow you to transfer an existing balance. Normally, the reason I would do this is to make use of a promotional period without interest. There are fees to consider, and the interest-free period does not last forever. To find out if you will be better off with a balance transfer card, you can use a service like The Good Finance to find the best deal.
Low interest credit cards
Low interest cards can offer you one of two things; a low fixed rate APR or a low APR period that will then increase to a higher rate once the period ends. Low interest cards can become a useful tool when a major purchase is made due to the period of time to pay at a lower interest rate if you can keep up with your payments. A service like The Good Finance could be used to check the best deals on low interest cards and see if they are for you.
Reward Program Cards
Reimbursement cards allow you to earn cash rewards for using them. This is excellent, as you will usually earn about 1% cash back for your purchase. This would be without the charges or interests. Some selected stores may offer a higher percentage of money back, which is always good news if you are a regular customer of that establishment. These cards may come with an annual fee, but they could be worth it if you can keep regular payments due to the cash reimbursement you can earn over time.
These cards work in a similar way to reimbursement cards, only that it accumulates points towards a reward scheme instead of cash. The rewards plan can usually be something like travel, hotel discounts or upgrades, sometimes even free nights! Another form of a card is a store card, it is usually a brand shared with a large store / retailer and, therefore, the points you earn can be redeemed at that store.
Unlike rewards cards, you get points when you buy flights (there are also other things that give you points, but mainly the purchase of airline tickets). You can have a specific airline card or a generic card that has multiple partners .The specific one of the airline is better for frequent travelers with a favorite line, since the discounts can be higher for a more loyal customer, while with a generic card you have the freedom of choice of the airlines.
Overall, I discovered that using a comparison service really helped me find the best card for my needs. In my case, it was a low interest card, I keep up with my regular payments and make sure to use the interest-free period. To find the best card for your needs, you can use a service like The Good Finance. Go ahead, look what we can find you!