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5 teaching tips on opening a credit card

Sienna Kossman

A few weeks back, my boyfriend Steven came in from getting the mail and was ecstatic about a pre-approved card offer he received. The card offer boasted a year-long, 0 percent introductory rate and would be perfect for financing his pricey grad school book expenses in the months to come, he claimed.

I winced. While I’m glad he is interested in strategically using credit to finance large purchases, applying for cards on a whim isn’t wise. It’s important to shop around to find the best offer.

I didn’t want to lecture him or make him nervous about taking on another credit card. So, instead of preaching the do’s and don’ts of credit card applications, I walked him through the process instead.

Here are five ways I shared my credit knowledge without being a know-it-all:

1. Show how to check his credit report and score before applying for a card.
Steven had checked his credit report only once, a couple years ago before he started paying off his student loans. The time lapse made me cringe, but I took the opportunity to explain why it’s important to regularly review your credit report and FICO score, and especially before applying for a new line of credit.

Here’s what else I shared:

  • Your credit report needs to be error and fraud-free, as both things can drag down your score, and negatively impact the outcome of a new card application.
  • Knowing your FICO score can help you pick the right card. You don’t want to sell yourself short by applying for a card best suited for someone with only fair credit if you have an excellent score.
  • A credit report and score check will also show where your credit needs improvement. Is a high card balance bringing your score down? Did you recently apply for another line of credit? A quick review can reveal small things you can do to increase your odds of approval when applying for a new card, such as paying off a card balance or waiting another month or two to allow your credit to bounce back from a hard credit inquiry.

After he pulled his credit report and FICO score from Experian via annualcreditreport.com, Steven signed up with my.creditcards.com to more consistently keep tabs on his credit.

2. Visually show the difference between card offers.
Steven was so excited about the 0 percent introductory purchase rate offer that tunnel vision set in. He knew he wanted such a card, and an option basically fell into our mailbox!

Instead of explaining why it wasn’t necessarily the best offer, I directed him to our 0 percent APR card pages, so he could compare more than one offer. Seeing all the options in one place, it became obvious that mailed card offers aren’t the end-all-be-all when it comes to new card options.

3. Ask “How will this card benefit you long-term?”
After reviewing 0 interest card offers and perusing a few issuing bank card pages, Steven asked how to narrow down his choices to one card, especially when many sign-up deals were similar.

I advised him to ignore the introductory offers for a moment and look at the card terms and standing benefits: What are the post-introductory purchase rates? Is it a reward card that you can use advantageously in the years to come? Do any of the cards charge a lot of fees, specifically an annual fee?

I wanted him to consider how useful the card would be once his coveted no-interest period ended. He eliminated a couple of cards that had annual fees, reward programs that he wouldn’t use, and cards with higher interest rates than others. This narrowed his options to a reasonable number.

4. Share what you would do, but don’t tell him or her what to do.
More confident, but still unsure, Steven plainly asked me what card he should apply for. While I easily could have said, “This one! Because of X, Y and Z,” I stopped myself. Instead, I framed my response as what I would do if I was in his position and why without naming a specific card.

I said, “I would select the card with the longest no interest introductory rate offer so you have more time to pay down your balance and the best general purpose cash back rewards program, since you already have a store-specific rewards card [he has an Amazon Visa]. I’d also look for a low standard APR rate so if I had to carry a balance after the intro rate expired, interest costs would be minimal.”

I knew two of the cards in Steven’s pool fit this description. It was up to him to make the final decision. After all, it was his card application and credit, not mine.

5. Once the applicant signs up, tell him what he did well.
Ultimately, Steven selected, applied for and was approved for the Chase Freedom Unlimited Visa. It boasts a 15-month, 0 percent APR introductory offer, an easy-to-use cash back program and no annual fee. He was even given the lowest possible standard purchase APR, 15.49 percent, and a substantial credit limit.

I thanked Steven for welcoming my input and not just jumping on the first mail offer he received. He said he felt confident in his decision, which made me happy. When I started my credit card journey, I applied for cards on a whim, so I’m glad I could help him avoid doing the same.

If someone asks you for credit advice, it’s easy to jump into know-it-all mode, but a more instructional approach can not only keep the peace between you and your friend, but help your friend learn and possibly pass your shared knowledge to someone else.

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