When Should You Get a Credit Card

The plain answer

You should consider getting a credit card when you have reliable income, can follow a budget, and can pay the full statement balance by every due date. A statement balance is the amount shown on your monthly bill at the end of a billing cycle.

You do not need a card because you are old enough to apply. If your income is unstable, you regularly run out of money, or you expect to use the card for expenses you cannot repay, waiting is usually safer.

How it actually works

A credit card gives you a revolving line of credit. Revolving means you can borrow, repay, and borrow again up to a set credit limit. Each month, the issuer sends a statement listing your purchases, payments, fees, statement balance, minimum payment, and due date.

If you pay the statement balance in full by the due date, most cards provide a grace period on purchases. A grace period is the time during which new purchases do not accrue interest when you meet the card’s terms. If you carry a balance, you may lose that grace period and owe interest.

A card can help you establish a credit history because the issuer may report your payment record and balance to the credit bureaus. It can also provide fraud protections that differ from those for cash or debit purchases. These benefits only help if fees and debt remain under control.

Before applying, confirm that you meet the issuer’s age, income, and identity requirements. If you are under 21 in the United States, federal rules generally require you to show independent ability to pay or have a qualifying cosigner, if the issuer allows one.

What this means for you

You are more likely to be ready if you can answer yes to these questions:

• Do you know how much money comes in and goes out each month?
• Can you cover an unexpected purchase without relying on long-term card debt?
• Will you review statements and pay on time every month?
• Can you avoid treating the credit limit as spendable income?
• Do you understand the card’s annual fee, interest rate, and other charges?

If you are ready, look for a card with no annual fee, clear terms, reporting to all three major credit bureaus, and approval requirements that fit your credit history. A secured card may be an option if you have little or no credit history. A secured card requires a refundable deposit that usually helps set the credit limit.

If you are not ready, you can build the habits first. Track spending for several months, create a bill-payment routine, and save a small emergency fund. Being an authorized user on a trusted person’s well-managed account may help in some cases, but its effect depends on whether the issuer reports authorized-user activity and how the primary cardholder manages the account.

Common mistakes

• Applying because of a sign-up offer without checking fees and approval requirements.
• Using a card as extra income rather than as a payment method.
• Assuming the minimum payment prevents interest. It usually prevents the account from becoming past due, but the remaining balance can accrue interest.
• Applying for several cards at once after a denial.
• Choosing a card with an annual fee that its practical benefits do not justify.
• Getting a joint or authorized-user arrangement without agreeing on spending and payment responsibilities.

Related pages

• Choosing Your First Credit Card
• How Credit Scores Work
• What Actually Improves Your Credit Score