Even if there’s technically nothing barring you from applying for a credit card, it doesn’t mean that you should jump at the first opportunity to sign up for one. Having a credit card in your name will present you with plenty of benefits, as it will allow you to enjoy better financial flexibility, help you boost your credit rating, and give you access to a long list of discounts, rebates, and other perks. At the same time, owning a credit card is a significant financial responsibility. Use it improperly and you might just find yourself in hot water.
It takes a certain level of maturity, discipline, and financial sense to be able to enjoy all the benefits of owning a credit card and none of the downsides. In truth, however, there is no standard checklist that can help indicate a person’s level of maturity or predict if you’re going to use your credit card wisely. Many experts agree, though, that these indicators can be a good sign that you’re ready to take on the responsibility of having a credit card under your name:
You Set and Follow a Realistic Budget
One of the basic signs of being financially responsible is having the ability to distinguish your needs from your wants. Figuring out the items that you can’t do without and those that can wait can help you budget your finances. This can also help you find out exactly how much you need to allot for every month and how much you need to save regularly so you can afford a big-ticket, nice-to-have item.
Making a habit of planning your purchases, both needs and wants, can help you avoid future financial issues. List down your grocery items every week and set a budget for it. Do the same for a pair of kicks that you want to buy to reward yourself for having done a good job at work. This way, you can save up for these expenses and you can buy them without having to sacrifice next month’s budget. If you can condition yourself to spend only on things you can realistically afford, then you’re less likely to get in financial trouble once you get your hands on a credit card.
You Make Sure to Pay Your Bills on Time
Using a credit card well means paying your bills on time so that you can avoid incurring hefty interest rates and build positive credit history at the same time. This, in turn, will make you more creditworthy and improve the chances of approval for your future loans.
Do you put a high priority on paying your bills before the due date comes around, or do you pay your bills a week or two after the deadline? If you’re still struggling with making on-time payments, then it’s a good idea to delay your credit card application. In the meantime, focus on being more conscious of your bills’ due dates. Once you have this habit down pat and you’re confident that you can make payments on time, you can consider passing that application to your chosen bank.
You Track Your Spending Closely
Evaluate your current shopping and spending habits. Do you tend to buy your wants on the spot even though they can set you back financially, or do you sleep on it first before deciding if you’ll really buy it? Do you prepare a checklist of the things you need to buy before you go shopping, or do you usually end up with items that you didn’t plan on buying?
Self-control is a big deal when you’re managing your finances, especially if you also own credit cards. For many people, spending money by way of using a credit card is a less painful experience compared to exchanging cold, hard cash. Because of this, there’s always the temptation to use your card to purchase items or pay for experiences on the spot, even if doing so will put you in the red. You’re borrowing from your future self just so you can give in to your indulgences today, and this type of mindset can lead to future financial woes.
You Make Sure to Do Your Research
You understand how credit cards work. You know that the items you purchased using your credit card can end up costing a lot more if you fail to fulfill your financial responsibilities on or before they’re due. It’s not free money, but it’s also a responsibility that you can use to your advantage—if you use it wisely.
If you identify with all of these points, then it’s a good indicator that you’re ready to enjoy all the good things that come with owning a credit card. On the other hand, if you find it difficult to stick to a budget, you’re frequently late in making payments, or if you’re prone to spending impulsively, then it’s only sensible to develop good financial habits first before submitting your credit card application.
