It is difficult to pick up a newspaper these days without reading about how much debt people and even nations have amassed and how problematic this condition has become. Large debt takes away one of the most precious feelings one can have -- financial freedom. When a person or a nation has large debt payments to make, they lose the ability to have discretionary income. Income that is free to be spent at your discretion or anyway you want without already being designated to be spent on a bill is high powered money. This is an interesting notion, because as people get older they often use debt to buy things that they need or feel they want now and pay later as their full time income grows. This causes the percentage of discretionary income to often become lower later in life than when those people were teenagers working a part time job.

The loss of financial freedom and the horrific stories of people getting so far in debt that they cannot see a way out of their difficulty has created an attitude of just don’t do it! Don’t go in debt or use debt very sparingly and don’t tempt yourself by applying for and getting a credit card or cards. For many young adults this is the message they constantly hear. As is often the case, however, there is more to the story and getting and using credit has expected benefits as well as expected costs.  In other words the question of applying and getting a credit card is a choice that might be good and might be bad based upon personal values, life’s goals, and the choices made along the way.

Application Insights-Should I Apply For A Credit Card? will help you answer the question and more importantly direct your perspectives on using credit so the expected benefits can be experienced without struggling with huge costs. Begin by truly understanding the information found in the application section. Remember, credit is using money owned by another party to buy something you want with the promise to pay that person/institution back with interest. The benefit to you is you get the opportunity of using /owning the item or service now and paying for it later.  The benefit to the lender is the amount you pay back that is over and above the amount borrowed. But of course the more you go into debt, the more discretionary income you lose and the greater is your chances of having more debt than you have income. As all of these factors represent choices, remember that few, if any,  are all or nothing.

Let’s begin by determining how important financial freedom is to you. Do you really like having a few bucks in your pocket or purse that is yours to do with what you want. Is going to a movie or buying some new clothes on a whim important to you?  Ironically, if the answer is yes don’t use a credit card for purchase because if you do, the ability to do what you love to do will go away quickly. In addition, you must consider your income potential both short and long term. If you for see large income growth in the near future your ability to pay for credit card debt may be enhanced so the difficulties of using credits cards a lot may not affect you as they do others. With this in mind let’s look at your decision regarding a credit card.

• The question of applying for and getting a credit card rests on your understanding of what credit is and how you will use it. Having a credit card in your possession does not mean you will abuse the privilege and go too far into debt. Remember, however, many people do and that was not planned. Therefore, an important part of this question is how much self control do you have? If you truly can say that no credit card will dictate my life’s choices, then obtaining a credit card is not much of a problem. You will have some additional flexibility without the problems. If, however, you have little self control, then avoiding the temptation might be the best choice.
   
• It is becoming quite clear that knowing yourself is an important part of this question. Not only do you need to know the level of your financial self control, you also need to know what you value most. Is instant gratification important or not, is the ability to take advantage of unexpected bargains satisfying, or how about the convenience of not carrying cash or checks (remember a debit card), or buying online a benefit. Contrast this to losing financial freedom or paying more for a purchase than would otherwise be the case by using cash.
   
• Identifying the many alternatives you may have for this question is very important. There are more alternatives than yes I want/need a credit card or no this is a product that does not fit me. Remember that credit cards come with many features. Some require that you pay the balance at the end of every month. Others are revolving credit cards allowing you to pay small amounts and accumulate debt with interest until you reach your debt limit. Note your debt limit is a choice or alternative in its own right and should be thoughtfully considered.  Interest rates, late fees, penalties, reward points, cash back options  make alternative identification a lengthy and important process. Don’t forget if emergency funds or flexibility is desired a savings account could even be an alternative or maybe a pre-paid card will do the trick.
   
• Thoughtfully determining the expected benefits and expected costs of each alternative is critical. Weigh each alternative against each of the others to how the balance falls for you. If it is too confusing or if you see a major difference between short and long term, say no to credit cards at this time (you will have the opportunity to get one later if you choose that option) or apply for a pre-paid or very low limit card today with the plan of changing later-perhaps after graduation or after you get that big raise.
   
• Because everyone seems to have had some experience with credit cards, seek the advice of others. Try to get input from people who have made varied choices. Find someone (if you can) that has said no to credit cards, one who has used them wisely, and one who has lost their financial freedom. It will be a lively conversation.
   
• Well, will you have plastic in your pocket or purse?  Be careful and remember every decision to use your credit card is an important decision. Use your guide!   

ADDITIONAL SOURCES

1) Best Credit Cards.
2) 10 Things Not To Do Before Applying For A Credit Card.
3) What Matters When You Apply For A Credit Card?