Credit cards 101

What's a credit card? A credit card is an agreement between you and a financial group, such as a bank, that you will pay them back in the future so that you can spend the money first. The financial group lends you the money you need and in return expects you to pay them back over a period of time. A credit card is a great financial tool. It can be more convenient to use and carry than cash and it offers you valuable consumer protections under federal law. How to Qualify for a Credit Card If you're at least 18 years old and have a regular source of income, you are well on your way to qualifying for a credit card. If you've financed a car loan or other purchase, you probably have a record at a credit reporting bureau. This credit history shows how responsible you've been in paying your bills and helps the credit card issuer decide how much credit to extend. How to choose a credit card? The first thing to consider is the interest rate on your credit cards. Low interest rates credit cards are always the best choice. Shop around to find the credit cards that offer lowest interest rates. Once you have a low interest rate card, get rid of your higher interest rate cards. Getting a reward card. Reward cards offer the same purchasing ability as regular credit cards but also allow you to enjoy rewards from points earned or immediate discounts on purchases at select retailers. The secret to finding the best reward card for you is to get a card that offers rewards from a vendor you normally shop at anyway. For example, if you buy a lot of petrol, get a card from a vendor that gives you points for filling up your car with petrol. Annual Fees. Many credit card issuers charge an annual fee for granting you credit. But there are also many issuers charge no annual fee. Establishing a Good Credit History After you've received your credit card, pay your bills on time - you'll establish a good credit history.