What to Consider Before Getting Your First Kredittkort?

March 6, 2021March 15, 2021 Geekopedia Account, Card, credit card, Deposits, Fees, Norway

Are you planning to submit a credit card application? Such a step is of crucial importance in the lives of young adults, as it requires plenty of responsibility on their part. There is an extensive range of factors a person should consider before opening an account, such as checking the interest rates, fees, deposits, and terms of issuers.

The following steps are worth taking into account before obtaining a credit card.

Make sure you are prepared for such a step

In order to get your first credit card, you have to be prepared for such an important decision. Even though issuers allow individuals to open an account once they turn eighteen, it doesn’t mean you’ll be ready for this kind of responsibility. Therefore, applicants between eighteen and twenty years of age face more rigorous requirements in terms of verification.

Prior to submitting an application, think about the responsibility you’ll be facing after you get approval. Many people cannot resist the temptation to use their credit cards to pay for items they cannot afford, thus ending up in the red. Unless you’re capable of paying your monthly bill without any reminders, submitting an application would be a bad idea. Check out this page for some practical tips on how to be responsible with your first credit card.

Bear in mind that your credit score will suffer a lot from irresponsible spending. Consequently, you’ll need years to increase your score and be considered an eligible applicant by banks and other institutions. Additionally, the options offered to newcomers are rather limited in the beginning because of their short credit history. The most suitable options for newcomers are either student or secured cards. Moreover, young adults, particularly those younger than twenty-one are likely to come up against difficulties in getting approved. You need to have a source of income i.e. a job in order to be meet the requirements of financial institutions. Otherwise, you will need to have a cosigner to get approved

Consider the security deposit

In case you have been rejected multiple times, there is no reason to give up trying. Secured cards are offered to individuals with little or no credit history. In order for a person to open such an account, he/she will be required to make a down payment. The deposit amount is usually equal to the limit imposed by the issuer.

The more you delay paying your monthly bills, the higher the chances of losing your deposit. In contrast, making all payments on time without exceeding the limit will have a positive effect on your credit score in a short time. More importantly, the issuer is likely to upgrade your account after seeing an improvement in your FICO score. It won’t take long before you get upgraded from a secured to an unsecured card.

Check the rates and fees

A significant aspect to consider before getting your first credit card is the terms imposed by issuers, referring to the interest rates and fees charged to cardholders. These are supposed to be displayed online in order for potential cardholders to check before submitting an application. Hence, you won’t be surprised by any unexpected expenses after the approval.

For instance, annual fees refer to the fees cardholders are required to pay on an annual basis. In contrast, APR, annual percentage rates, are the interest rates cardholders need to pay each month. Interest rates tend to vary in relation to the type of balance. Consequently, you’ll be required to pay higher interest rates when transferring debts, whereas you’ll be paying lower rates than making purchases.

Foreign transaction fees, on the other hand, are charged whenever cardholders purchase products outside the country, which are normally three percent of the entire amount. Finally, late fees, as the name implies, are charged when cardholders make payments later than the due date. Some information, however, isn’t disclosed by issuers before an application gets approved, such as the card limit.

Consider the ways to avoid such fees

Even though the above-mentioned fees sound terrifying for most individuals, most of them can be avoided. There is a myriad of educative sites, like https://www.kredittkortinfo.no/, providing up-to-date information related to credit cards. These websites educate people on everything they need to know about getting such a card. For example, in order to avoid paying annual fees, one is advised to apply for a secured card, as it involves paying no such fees.

Moreover, late fees can also be avoided by making your payments on time. Being responsible is the easiest way to prevent paying for unnecessary fees. The same goes for foreign transaction fees, which don’t apply to people who plan on making no foreign transaction. Even if you plan to buy products in a foreign country, try finding an issuer that charges no extra money for such transactions.

Consider the interest

Interest can also be avoided when having a credit card, provided you pay your monthly bill on time. It’s vital to pay the full bill within the grace period so as to prevent interest from accumulating. By paying the entire bill before the due date, you won’t have to spend a single cent on interest.

On the other hand, failing to pay the entire bill until the due date will result in paying interest on the balance you’ve transferred to the following month. Additionally, you will be charged interest on purchases as soon as you transfer a portion of the bill to the month that follows.

Avoid late payments

Credit cards aren’t the best option for irresponsible spenders because of the number of costly fees, which are charged immediately after a cardholder misses the due date. The amount is determined in accordance with the type of delay. The more days cardholders fall behind their payments, the higher the fees.

Late fees are charged to anyone failing to pay their bills within the agreed deadline. These are changed every year by issuers. In contrast, penalty APRs are considered worse than late fees, as these penalties are capable of increasing the interest rate to as many as thirty percent. Fortunately, the largest number of issuers have stopped charging penalty APRs. Anyhow, don’t forget to confirm this fact before selecting an issuer.

Ultimately, late payments are detrimental to the credit score of individuals. While delays of a single day aren’t considered harmful, those of at least thirty days have a harmful effect on cardholders’ scores.