Getting a credit card is a great step towards financial independence! But it’s important to understand that not all credit cards are created equally, and some can even get you in real trouble. 

Before you even get started applying for cards, it’s important to know your credit score. Why? Because many cards will only accept your application if you have a minimum credit score. And since all credit card applications (temporarily) ding your credit score, there’s no point in taking a credit hit if you’re not going to qualify. Don’t know your credit score? No problem. You can check it for free in about 90 seconds with a company called Credit Sesame. In addition to quickly getting your free credit score, you can also learn tips and tricks on how to improve your score.

While there are dozens and dozens of credit cards a consumer can choose from, they’re not the same. Some cards are exclusively available for established adults with excellent credit, others are targeted at people with poor or even no credit history. Some offer appealing perks like cash back or points that can be redeemed for airline tickets, while other cards actually require a security deposit just to be approved. It’s important to understand the five key factors that impact your credit score. But all credit cards come with real fees, real opportunity to make- or break- your credit, and real financial implications. 

When selecting a credit card, there are a number of factors to consider, especially if you think you won’t be able to pay the balance off in full each month and will carry a balance (we’re looking at you, fees and interest). Though not exhaustive, these three tips are simple facts any young person should consider before opening their first credit card.

Introductory Rates – Credit cards- especially ones marketed towards college students or other young people with limited or no credit history- are notorious for having extremely attractive introductory annual percentage rates (APRs). While the low interest rates may be appealing, it’s not uncommon for the fine print to break the news that the low rate isn’t forever, and soon, you’ll be subject to a much higher interest rate. 

But if you keep your spending to a level within your means and you’re able to payoff the balance each month, the increase in interest rate won’t affect you, as the rate only impacts unpaid balances. 

Rates vary widely, from 11-30%, so researching the rates on a number of cards could save you a substantial amount. 

Annual Fees– While the total dollar amount of annual fees is usually far lower than what you could wind up paying with high interest rates, it’s worth checking on the annual fees a card charges. 

As with introductory APR rates, annual fees might not take effect right away. It’s common to see cards advertising themselves as having no annual fees, but hidden within the fine print is language saying that in year two and beyond, they assess a fee of anywhere from $20-150.

For college students or those just starting out in their effort to build strong credit, it’s unlikely that a card with an annual fee would be the best choice, because it’s generally just wasted money. But the exception to this might be if a card has a specific benefit that outweighs the cost of the annual fee. 

Swag Just Isn’t Worth It– Sure, we all love free stuff, but the years of headache that could arise from impulsively opening- and using- a credit card just isn’t worth it. While they’re less prevalent now than in years past, it’s not uncommon for credit card companies to set up booths on college campuses in an attempt to sign up new cardholders. They’ll often try to entice young people to signup with free merchandise- often as silly as a t-shirt, frisbee, water bottle, or a pizza!

Selecting a credit card is an important financial decision and should not be made impulsively. Simply applying for a credit card will negatively impact your credit score– not to mention the damage credit card debt will do- so it’s important to carefully evaluate why you want to apply for a credit card, research your options, and only apply when you have all of the facts.  

Experts agree there are a number of things any credit card holder should do to ensure they don’t drown in a mountain of debt, or be crushed by a years-long bad credit score. Paying off the balance in full each month is number one, but that can be next to impossible if you’re fighting a massive interest rate. Avoid this headache all together and make sure you understand what to look for when applying for your first credit card.