You want to open a checking account this year. You’ve got plans for a new car, perhaps a new house, but you’re behind on your banking know-how. How do you get started?
Your first order of business is to get a debit card and a credit card. Even if you don’t have plans to save up for anything large, it’s best to get started on the path to good credit as soon as possible. There’s nothing quite like having a bunch of options at your disposal! Along the way you’ll build good financial habits, become comfortable with the process, and soon become a banking expert. Before you do all that, though…
…let’s learn about the function of a debit, the goal of a credit card, and where you stand in the mix.
Today’s Astronomical Debt Problems
Here’s one thing you know for sure…debt is a huge problem. You likely have a friend or two who’s struggling to pay off their student loans or has a credit card they can no longer use. According to recent statistics America’s debt problem is in the trillions — as many as 40 million have student loan debt to contend with, with $50,000 the average. When you open a checking account it helps to be aware of these numbers so you can do your best to circumvent them. It’s not a scary scenario, but an important lesson to guide you forward.
Common Fears Concerning Credit Cards
Some people avoid credit cards entirely and choose to focus on debit or cash. While that’s a noble effort, it can still put you in a bad spot when you want to apply for a loan in the future. The average American today has seven credit cards to their name, with credit card debt the most common form of debt besides car loans and student loans. Many find themselves leery of applying for a credit card because there’s no need to punch in a security number, which can lead to impulsive behavior (or very easy theft). There are benefits, though, and you can start gaining them within months of applying.
The Benefit Of Building Good Credit
Good credit opens up a ton of doors for you. It can increase your chances of getting accepted for auto loans. It can make you look a lot better in the eyes of mortgage lenders when you finally settle down for a home. A good credit score ranges between 300 and 750, though anything above 700 should generally be a point of pride. Applying for a loan is a process you’ll get more familiar with as you go on. It’s okay to admit you could use a little help when it comes to navigating money, credit, and lending!
Basics Of Car Loans And Mortgage Loans
The most important thing to know about a loan is not to accept more than you can pay off. This is best done by looking at your monthly statements for the past five to six months, all the better to give you perspective on how much you make. Your mortgage, for example, shouldn’t be more than 20% or 30% of what you make in a month. Take a similar approach to car loans when talking to a banker. You want to make sure you still have enough for rent, bills, and food.
Important Questions To Ask Your Banker
You know for sure you want to open a checking account. You’re worried about adding more debt to your name, but you’re committed to building good habits. Your first questions should be about how much you make in a month and what you can expect to gain from the credit card you apply for. Each credit card will have their own unique benefits, such as lower interest rates or special deals that switch each month. Make sure not to lend your credit or debit card to anyone, even someone trusted, as you’ll be held liable if it’s lost or misused.
It’s a new year and you deserve a fresh start. Open a checking account and apply for a credit card with your trusted banker today.