Shopping for Credit

It's important to consider the reasons that you need credit before shopping for it. Is it for a specific purchase? In case an emergency comes up? To earn more travel rewards? Let's say it's because you don't like to carry cash. You could obtain a charge card that requires you to pay the balance in full each month, or a debit card that works like cash and has the amount you spend immediately deducted from your bank account. This would satisfy your objective and keep you from building up a large debt balance. Or, if you need to make one specific purchase, consider a store credit account. You could buy that TV, but you won't have the temptation of universally accepted plastic in your wallet.

Questions for your lender

Every credit offer should include a terms disclosure: interest rates, fees, minimum finance charges, etc. If you don't have this disclosure, ask for it. To be really thorough, you should review all the terms. Credit cards list these on the cardholder agreement, which you don't receive until after you're approved. At that point, you can always chop up the card and cancel the account if you change your mind. Personal lines of credit list the full terms on the contract. It's tedious, but you should read and understand that entire document.

Credit can be a fickle friend; but it is manageable. Even if you forget everything else, remember these two things: there's a cost to every purchase made on credit, and there's a reward for managing your credit responsibly.