Maybe you're soon heading off to college or you've always used a debit card instead of a credit card. Maybe there's another reason that you're looking for your first credit card, but as you search you're likely finding a lot of choices, a lot of websites and a lot of numbers you don't understand.

Do You Need a Credit Card?
First, what is your purpose for having a credit card? Consumer finance expert Dave Ramsey believes there is no good reason to have a credit card. You can build a credit history without credit cards. Although cash is going out of style, Ramsey cites a study that found people spend 47% more with a credit card than they do with cash. Ramsey advises his listeners to only use cash and have a debit card for purchases that require a card.

College Students
Fox Business reports that 70% of college students have credit cards and five out of six don't know the card's interest rate. A study done by Sallie Mae found that in 2009 the average credit card debt carried by a college student was about $3,100. Instead of a college credit card, parents should consider making their children authorized users on their own credit cards, or giving them a prepaid card that cannot hold a balance. Another option is to open a bank account and use only a debit card. Experts agree that students who graduate with credit card and student loan debt are finding themselves ill equipped to pay back those loans when they graduate.

How to Pick a Card
If you believe that a credit card is appropriate for you or your child, look beyond the advertisement page and find the disclosure page. All credit cards have to use a standardized disclosure format that is easy to read and understand. First, look at the interest rate. When evaluating your financial behavior, assume the worst. Even if you plan to pay the balance in full each month, what happens if you don't? How does the card's interest rate compare to other cards you're considering? What is the penalty interest rate? What will the rate be if you miss a payment? Next, what are the fees? In general, you should never pay an annual fee unless the benefits far outweigh the fee. For your first credit card, that's unlikely to be the case. Look at set-up fees, fees to speak to a customer service representative and the others listed. Compare those to other cards.

Your Credit Union
There are numerous credit cards designed for college students and first time users to choose from, but advises consumers to check with their local credit unions. Credit unions are nonprofits and their rates and terms may be more customer friendly than larger banks and card companies.

The Bottom Line
How are your spending habits? Would people consider you a saver or spender? How interested are you in the inner workings of your finances? Many people are able to hold credit cards and pay the balance in full each month, but nearly 60% carry a balance each month. If you will use your card to spend money that you don't already have, stick with a debit card or cash. If you will be part of the 40% who pays the bill in full, a credit card may be a responsible tool for you. All experts agree that teaching children to never spend more money than they have is the best advice money can buy. Ramsey says that good financial habits are 80% behavioral, rather than being a function of how much money you have.

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