Used sensibly, a credit card can be a handy financial tool. It can help you to spread the cost of an expensive purchase, it provides important purchase protection and it can help you improve your credit rating.
However, when you’re younger, credit cards can be harder to access simply because you’re unlikely to have much of a credit history. This means that lenders have no way of being able to assess how responsible you are with credit and your credit card options are likely to be more limited compared to someone with a credit history spanning several years.
Whether you should apply for a credit card will depend on your personal circumstances. First of all, keep in mind that if you’re under 21, you will only be accepted for a credit card if you have your own independent source of income – typically, if you’re employed or receiving a student loan. If that isn’t the case, it’s unlikely you’ll be able to get one.
Secondly, if you’re completely new to banking and have never, for example, had a current account, you should probably start from there. A regular current account with a debit card and overdraft facility will usually cover most of your financial needs.
However, if you have a regular income and you’re looking for some extra flexibility if you’re periodically strapped for cash, or if you want to start building more of a credit history, a responsibly-used credit card could be a good idea.
When applying for a credit card, it’s important to understand which type of card you’re most likely to get accepted for. Given you’re young and won’t yet have an established credit history, you’re unlikely to get accepted for credit cards that offer a wide range of rewards, nor are you likely to qualify for the longest 0% interest deals. These are usually reserved for those with excellent credit records.
Instead, because this might be the first time you’ve applied to borrow money and there won’t be much to see on your credit file, lenders will view you as higher risk.
For this reason, if you do get a credit card, you’ll probably be offered a low credit limit and possibly a higher interest rate. If you use the card correctly, this shouldn’t matter too much as long as you clear your balance in full every month, you won’t be charged any interest at all. However, if you don’t, a credit card can quickly become a very expensive way of borrowing money.
Below, we’ve outlined some credit card options to explore, depending on your personal and financial circumstances:
As well as credit cards, there are a number of other options you could explore to get access to extra cash, or to improve your credit score so that you can secure better deals in the future. These include:
Using a comparison tool, such as that on offer from Finder, will help to make your life a little easier when it comes to hunting out the right credit card. It’s also worth following the steps below:
There are a number of simple ways you can improve your credit score, including registering on the electoral roll and paying bills on time. You won’t see an immediate impact, but you should start to see an improvement in your credit score after a few months. Head to the bad credit section of our website to learn more.
In your search, don’t waste time looking for credit cards that offer the best rewards or interest-free deals as you’re unlikely to qualify for them. Instead, think about why you need a credit card. Are you looking to use it when you’re temporarily strapped for cash or are you hoping to improve your credit score, or both? Prioritise the features that will give you most of what you need.
Credit cards have dozens of different features, but once you know what you need, you’ll also know which ones to compare. Look for credit cards that don’t charge an annual fee and don’t have strict income requirements. Interest rates may be higher than you expect and the credit limits will probably be low. If you opt for a student card, bear in mind that they’re usually tied to a student bank account meaning you have to have both with the same bank.
Once you think you’ve made a choice, it’s a good idea to use an eligibility checker, like Finder's free tool, before you apply in full. This will tell you which cards you’re most likely to get accepted for and, as they use a “soft credit check”, this won’t appear on your credit report.
If you haven’t skipped any of the previous steps, this one should be a piece of cake. Have all your personal and financial details ready and always provide accurate information. You can usually apply online and it shouldn’t take longer than 10-15 minutes.
Protect your credit score by setting up a direct debit to cover at least the minimum required payment each month. If you can, set it up to clear the full balance each month – that way you’ll usually avoid interest altogether.
Use our calculator to find out how long it would take to clear your credit card balance by making the minimum required payments vs paying a fixed amount each month.
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