Credit cards- never had one. can someone explain the things I need to know?

Question

I am 21, Im a full time uni student and I get student youth allowance( government welfare payment) and I have a part time job.

I am thinking about getting a credit card. The main reason is because I often find myself in situations where I need to get something on a particular day, but I dont have the money, but within days I then have the money but it has gotten to the point where the purchase would be useless as it is too late. For example, I currently need to buy my birth control pill, however I will not have the money until Friday, but on Friday and the weekend I will be working and wont be able to access any pharmacies, so if I could purchase it today, everything would be fine! I have things like this happen quite frequently and I think a credit card would help with this problem. I also have the intention of only using it for situations like this, and paying the amount charged back as soon as possible, which would often be within a matter of days.

So I have a few questions. Firstly, what amount is a 'good' interest rate per annum? I can get one that has no annual fee (waived because I am a student) but the rate per annum is around 18%. Or most others that do have an annual fee (about $50) seem to have a lower rate of 11%, so how do I know which is better?

I also am hoping I can put a limit on it, like say $500 so that way I could only use it for small purchases. Is that possible?

I also am not sure about interest free periods, do most cards have these? So if I were to charge somehting on the card today, does that mean if I pay it off within the interest free period that it would be the same amount to pay as when I purchased it? If interest free periods are not usual, then generally, how long is it before the interest starts adding up. If I pay it all off within a month, then do I still get charged interest?

Also, is there any other advice?

I would ask my parents all about this, but they are off holidaying somewhere and they have no phone reception there (lucky b******s).

Thanks heaps.

Answer 1

i wouldnt be getting one there a waste of time to get and they let you go broke

Answer 2

First off, since you're a student and you never had a credit card before, I would suggest a student credit card. You can get that usually at any bank. It has no annual fee and has a low cash limit, usually $300 - $700. It is a great way for students to start to build credit. Generally students usually get approved when applying for a student credit card when they have no established credit history.

Right now since you have no credit, you won't be able to get a credit card with a low interest rate, but if you pay it ASAP or pay off the full balance each month you don't have to worry about any interest rate. Credit cards only charge interest on the balance that you don't pay off each month.

After 1 year of using it and paying it off on time, you would of established credit meaning you are trustworthy of borrowing money and paying it back on time. Then you can get better cards with rewards and cash back.