What Do You Do,

Let’s say you started your first job and you want to open a credit card account but you don’t have a credit score yet—or you do have one, but it’s low. What do you do, Luckily, there are several alternatives. When applying for a card, the bank company will first look at your credit score and your income. You don’t always need a job to qualify for one, but you do need to show that you’re able to repay your credit card balance at the end of each month.

Showing that you have a steady income is an essential qualifying factor. The higher the income, the larger your credit limit will be. Based on your income and your credit history, the bank will be able to make determination about what they are willing to give you. “The card they’ll offer you will probably have a low credit balance that will limit how much money you can spend on it. If you’re a student and you don’t have a significant income or credit score, you can apply for a college student credit card.

Make sure to look at annual fees and interest rates before starting the application process. Also, check with your local credit union for card offers. While smaller and local banks usually have higher interest rates, they’re also more likely to accept your application. When choosing a secured credit card, make sure you pay attention to application fees, processing fees, and annual fees.

Cards with high fees can significantly eat into your credit limit. “I’m partial to secured credit cards, especially for people who have no real credit history—even if they have a job with a decent income. I think it’s a good way to get into the credit space without doing damage,” said Tepper.

Even thought many sites discuss the best secured credit cards, you have a lot of things to consider when choosing one. Tepper recommends focusing less on rewards perks and more on no annual fee and the lowest possible APR. “Look at local credit unions—they will probably have lower fee products in terms of APR, lower interest rate and no annual fee. By submitting an application with a co-signer—a parent, spouse or household member—you’ll benefit from their good credit score and revenue.

Keep in mind, however, that your co-signer will have access to your account and will be able to see your purchases and transactions. This might be helpful to you—you can count on that person to remind you to pay your balance on time, and even help you financially, if they’re okay with it.

Do your research ahead of time to see which card best fits you. If you don’t get approved, your bank will send you a letter and tell you why. “It probably means that you applied for a card that has too many rewards, something meant for higher income or people with a longer credit history,” said Tepper. You might just automatically apply to get a credit card with the same bank where you have your checking account. Instead, think of finding the right card as finding the product that best fits you. “You can’t think in terms of banks—you have to think in terms of products,” said Tepper. There’s no real advantage to using the same bank; more importantly, do your research and find which card is right for you.

However, don’t dismiss credit cards! Credit cards bring great value to your short term cash flow because you get to hold on to your cash longer by taking advantage of the float they provide (between 30-60 days). Also, can we admit that the rewards/cashback programs are just simply amazing! Therefore, don’t get a credit card to revolve balances because that means you can’t afford what you are about to purchase! Improving your cash flow is a huge value proposition that credit cards offer because you have a 30 day billing cycle and a 30 day payment cycle.

In other words, you have 30 days to use the card to pay for your expenses. Once that cycle is over, a credit card statement is produced and you have to pay it off in full within 30 days. Notice how I said “pay it off in full” and not make the minimum payment! If you’ve established your budget and you are living below your means, then why are you about to make minimum payments and pay interest, If you are paying interest, you need to stop and adjust your strategy!

Stop paying interest on credit cards and personal lines of credit! You want to avoid paying interest to the banks at all costs. Change your mind set and your perception of a credit line and credit card. See them as an opportunity to extend your cash flow and to receive rewards! Don’t use your credit cards to make huge purchases and to live above your means.

It makes no sense — you’re giving your hard earned money away to the banks. Were those pair of shoes or was that new suite worth it, Are you willing to pay interest on it and then experience buyer’s remorse because you know you can’t afford it, STOP and think about your budget and financial goals before making the wrong purchase. If you are leveraging your lines of credit and credit cards, make sure to pay them off in full every month!