If you’re a college student eager to start building a positive credit history, you may have a few options to consider.

But first things first: How old are you? People under 21 can legally open a line of credit, but you’ll probably need a co-signer or proof of income to open a credit card.

Your specific game plan may depend on your age and whether you have a parent or guardian willing to co-sign a credit card with you or add you as an authorized user. With that in mind, you may not find it necessary or possible to follow all of the following steps, but we think they’re a solid blueprint to get the ball rolling on a lifetime of excellent credit.

1. Consider whether you need student loans

If you need financial aid to complete your undergraduate degree, you may want to look into federal student loans. While private student loans may require an established credit history, most federal student loans don’t require a credit check. That means you can borrow the money you need to pay for school and build your credit by paying back those loans responsibly and on time.

2. Become an authorized user on a family member’s credit card

Being an authorized user means you can use someone else’s credit card in your name. You can make purchases and use the card as if it were your own, but paying the charges legally remains the primary cardholder’s responsibility. It can be a great way for you to start building credit — most (but not all) credit card issuers report account activity to an authorized user’s credit reports. This can help you build credit if both you and the primary cardholder manage your cards responsibly.

3. Get your own credit card

Once you’re able to open a credit card in your name, this will be another way to build your credit history. Secured credit cards offer a potentially appealing option if you’re looking to build credit for the first time. To use one, you’ll need to make a security deposit, which then becomes your initial credit line. Just make sure the issuer reports your activity to the credit bureaus so you can start building a credit history.

4. Practice good credit habits

Once you open your first line of credit — whether it’s a credit card or a student loan — you’ll want to manage that credit wisely.

• Pay off your balance on time and in full. Paying what you owe on time and in full shows lenders that you’re reliable and will pay off your debts. It’s often a significant factor in determining your credit scores.
• Avoid opening multiple accounts at once. People with short credit histories who rack up lots of new accounts in a short period of time might be seen as riskier borrowers than those with long histories and fewer accounts.

5. Get credit for your rent payments

Several services will help ensure your positive rent payment history is reported, which can help you build credit even without a credit card or loan. If you’ve always paid your rent on time and your lease is in your name, it may be worth trying to get it reported on your credit.

Financial success doesn’t happen overnight, and it’s not the result of making the right choice on one major money decision.

We’ve highlighted three key components of personal finance — building a budget, eliminating debt, and savings — to help you build a solid financial foundation for long-term success.

1. Understand your cash flow and build a budget that works.

Budgeting allows you to understand how much money goes in each month and how much goes out, helping you stay on track with your goals and use your money exactly how you want.

If you’ve never made a budget before, here are some steps to get you started:

• Track your cash flow. Write out how much you have coming in each month as well as set costs going out, like your rent, cellphone bill, student loan payments and transportation costs. This will give you an idea of how much of your income you can use for flexible spending on nonessential items and how much you can allocate toward savings goals.
• Start automatic contributions. Setting up automatic deposits from your checking to your savings account means you don’t have to think twice about saving.
• Stick to it. It’s hard but don’t fall off the wagon. If you do get off-track, don’t quit budgeting — simply try something new until you find a system that works well for you.

2. Eliminate debts that drag down your financial health.

If you have debt, allocating some of your cash flow to paying down those balances is the next step in building a strong financial foundation.

In general, “good debt” is debt that allows you to leverage your money to gain an asset. A mortgage, for example, is debt, but it allows you to buy a home today and pay it off over decades. You can also use your home as an asset by renting it and earning income, or by potentially earning a greater return when you go to sell if the value appreciated over time.

Credit card debt, on the other hand, is a type of “bad debt” in the sense that it doesn’t allow you to build an asset. It’s just money you need to repay with interest.

Here are some first steps to help get you on track:

• Get organized. Write down all your debts that you need to pay off in one place. Note the source of the debt, the amount of the balance and the interest rate.
• Pick a payment plan. You could prioritize debt repayment by interest rate and pay off the ones with the highest interest rate first, or prioritize it by smallest balance to largest balance and pay off the smallest balance first to get going.

3. Take your savings to the next level

If possible, your budget should include setting aside money for savings. To start, set a goal of creating an emergency fund that houses 3 to 6 months’ worth of expenses.

From there, you can create other specific goals you want to fund or simply aim to save a small percentage of your income for the future. You can start with just 1% and incrementally raise that rate over time to save more.

But there’s one big downside to having a lot of cash sitting around: It’s not doing much for you. The best savings interest rates hover around 1% to 1.25%. A high-yield checking account may garner more (up to 5%), but these accounts typically have balance caps.

It’s nice that your cash can earn a little extra money for you, but those interest rates probably won’t beat the rate of inflation over time. Also, these interest rates may be subject to change over time.

If you have a high interest rate on your credit card, you may be looking to negotiate a lower interest rate.

Credit cards are great tools that can help you leverage your cash flow, since you can make purchases now and pay later. Cards can stretch your dollar a little further, too, if you take advantage of rewards or cash back cards.

But credit cards may also come with high interest rates that make carrying balances expensive for cardholders.

If you currently carry a balance on your card and want to avoid incurring more debt, lowering the interest rate on your card can help. But how do you lower your credit card interest rate without switching cards?

You can negotiate with your bank or credit card company to get a lower interest rate on your card. Although the card company may ultimately say “no,” knowing these steps could help improve your chances of getting a favorable response.

1. Evaluate your current situation
2. Build your credit first if you need to
3. Find competing credit card offers
4. Understand the credit card company’s perspective
5. Call and make your request
6. Don’t be afraid to negotiate in the future
7. Consider a balance transfer credit card instead

1. Evaluate your current situation

Before you call the customer service number on the back of your credit card, understand what you’re working with. Know your current credit card terms, including the grace period, statement due date and your current credit card balance.

By coming prepared, you’re setting yourself up to do a better job of evaluating the options your credit card company might offer.

Don’t forget to check your credit, as well. You can use this as leverage in your negotiations. Having strong credit may indicate you’re likely to repay your balances and what you owe, so credit card companies may be more willing to meet your requests.

2. Build your credit first if you need to

If you find your credit is less-than-optimal, you may want to work to build your credit health so you look more creditworthy to the bank.

Try to keep your credit utilization rate — the percentage of your credit limit that you’re using — at 30% or less.

3. Find competing credit card offers

Credit card issuers and banks need to compete with other brands to acquire more customers. That means they need to stay competitive with their rates.

Do your homework and look at other available credit cards. If you find a similar card to yours that offers a better rate, note the card’s name, company and terms. You’ll want to share this information when you reach out to the bank.

4. Understand the credit card company’s perspective

You can better negotiate if you understand what the bank or credit card company needs to see on its end to agree to your request. Sometimes a bank would need to ensure customers were lower-risk before agreeing to drop the interest rate.

5. Call and make your request

Now you’re ready to get your credit card and call the customer service number listed on the back. When you reach a representative, politely explain the reason for your call.

If you have good credit, you can remind the representative of that and point to your history of being a good customer (by regularly using your card and paying your bills on time).

You may want to share your information about the other offers available from different companies, and explain why you may transfer your balance to a new credit card if you can’t get a lower interest rate from your current company. You can also ask if they will at least match the interest rate on a competing card.

6. Don’t be afraid to negotiate again in the future

John Rampton, founder of Due, has successfully negotiated lower rates for his credit cards and does so periodically. He says to expect to haggle and recommends you don’t give up after one call.

From his experience, credit card companies seem more willing to offer lower rates when you ask after making consistent payments on your card for at least six months. He follows up with requests every six months to ask for lower rates until he receives a “no.”

7. Consider a balance transfer credit card instead

Balance transfer cards may provide you an alternative for getting a lower interest rate on your current credit card debt. This may allow you to consolidate your existing balances from multiple cards onto a single, new card.

You’ll want to use a credit card with a 0% introductory annual percentage rate, or APR, offer for balance transfers to save money on your debt repayment. Here are some cards to consider.

FAQs about credit card interest rates

Bottom line

Here’s what to keep in mind if you want to learn how to negotiate with your bank or credit card company to lower your credit card interest rate.

Use this process for negotiating a lower rate with your bank or credit card company. If you succeed, you might be able to save on your debt repayment and pay down your balances faster.

If you’re a college student and you don’t have a credit score yet, you may have a few options to consider.

You’ve got to build your credit history to get a score. But how do you do this?

You’ll need to get an account that will report your payments to at least one of the three major consumer credit bureaus — Equifax, Experian and TransUnion.

Your specific game plan for building credit may depend on how old you are: You can legally open a line of credit even if you’re under 21, but you might need proof of income to open a credit card. If you don’t have that, you may have a parent or guardian who is willing to co-sign a credit card with you or add you as an authorized user.

1. Become an authorized user on a family member’s credit card
2. Apply for your own credit card

1. Become an authorized user on a family member’s credit card

If you’re not ready to apply for your own card, a trusted family member may be willing to make you an authorized user on one of that family member’s accounts.

Being an authorized user means you can use someone else’s credit card in your name. You can make purchases and use the card as if it were your own, but paying the charges legally remains the primary cardholder’s responsibility. The primary cardholder — a parent, for example — can make you an authorized user by adding your name to the credit card account. Just make sure that the credit card issuer reports authorized user accounts to the three major credit bureaus.

Being an authorized user can help your credit in a few ways, as it can positively affect factors that go into your credit score like payment history, age of credit history and number of total accounts.

Be aware that if the primary cardholder misses a payment or starts carrying a large balance, this can negatively impact your own credit.

2. Apply for your own credit card

Getting a credit card is a great way to start building your credit history.

Secured cards

These types of cards can help you learn to manage credit, since you usually can’t spend more than your secured card deposit. Just make sure to make your payments on time and try to keep your spending under 30% of your credit limit, otherwise this could have a negative impact on your credit. Also double check that the issuer reports your activity to the credit bureaus so you can start building a credit history.

Student cards

Another option is a student credit card, which is meant to give students an opportunity to build their credit. This may even come with rewards. Watch out for higher interest rates when it comes to student cards, though — paying your balance off in full and on-time each month can help you avoid interest charges and build your credit.

Bottom line

It can take patience and time, but the sooner you start building your credit, the sooner you can get a credit score. Just make sure to practice smart credit habits, like charging only what you can afford and paying your monthly balance on time and in full.

If you’re a college student eager to start building a positive credit history, you may have a few options to consider.

But first things first: How old are you? People under 21 can legally open a line of credit, but you’ll probably need a co-signer or proof of income to open a credit card. You may be able to apply and qualify on your own if you have income from a job, but this isn’t the case for a lot of students.

Your specific game plan may depend on your age and whether you have a parent or guardian willing to co-sign a credit card with you or add you as an authorized user. With that in mind, you may not find it necessary or possible to follow all of the following steps, but we think they’re a solid blueprint to get the ball rolling on a lifetime of excellent credit.

Keep reading to learn how to build credit as a student in five easy steps.

1. Consider whether you need student loans
2. Become an authorized user on a family member’s credit card
3. Get your own credit card
4. Practice good credit habits
5. Get credit for your rent payments

1. Consider whether you need student loans

If you need financial aid to complete your undergraduate degree, you may want to look into federal student loans.

Many students and young people encounter a frustrating credit conundrum: It can be difficult to qualify for the best private loans or credit cards with little to no credit history. But how does one build a credit history without those loans and credit cards?

One way to start is with a federal student loan. While private student loans may require an established credit history, most federal student loans don’t require a credit check. That means you can borrow the money you need to pay for school and build your credit by paying back those loans responsibly and on time.

2. Become an authorized user on a family member’s credit card

Being an authorized user means you can use someone else’s credit card in your name. You can make purchases and use the card as if it were your own, but paying the charges legally remains the primary cardholder’s responsibility. The primary cardholder — your parent, for example — can make you an authorized user by adding your name to their credit card account, and it can be a great way for you to start building credit.

Why? Because most (but not all) credit card issuers report account activity to an authorized user’s credit reports. This can help you build credit if both you and the primary cardholder manage your cards responsibly.

“When I was 16, my grandmother added me as an authorized user on one of her credit cards,” says Leanne Ross, founder and CEO of Ivy Ladder, an online career resource for students. “She thought this was a great way to start to build my credit from a young age.”

Grandmother usually knows best. Still, be aware that if the primary cardholder misses a payment or starts carrying a large balance, this can actually negatively affect your own credit.

How many authorized users can I add on a single card account?

It depends. Different issuers and cards may have different restrictions around this, so it’s important to read the terms and conditions for your card before adding an authorized user. Some cards also charge a fee per authorized user, so that’s something else to look out for.

3. Get your own credit card

Once you’re able to open a credit card in your name, this will be another way to build your credit history.

Ross says this is what she did in college — and she always paid off the card balance in full each month. “I didn’t want to use the card as a way to spend money that I didn’t have,” she explains.

Secured credit cards offer a potentially appealing option if you’re looking to build credit for the first time. To use one, you’ll need to make a security deposit, which then becomes your initial credit line. For example, with the Capital One Platinum Secured Credit Card, you’ll get an initial $200 credit line after making a deposit of $49, $99 or $200.

These types of cards can help you learn to manage credit responsibly, since you spend more than your secured card deposit. Just make sure the issuer reports your activity to the credit bureaus so you can start building a credit history.

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4. Practice good credit habits

Once you open your first line of credit — whether it’s a credit card or a student loan — you’ll want to manage that credit wisely.

Knowing how credit scores work and why credit is important can help you make smart financial decisions. Here are a couple of quick tips to keep in mind.

• Pay off your balance on time and in full. Paying what you owe on time and in full shows lenders that you’re reliable and will pay off your debts. It’s often a significant factor in determining your credit scores.
• Avoid opening multiple accounts at once. Your “new credit” may influence another portion of your credit. People with short credit histories who rack up lots of new accounts in a short period of time might be seen as riskier borrowers than those with long histories and fewer accounts.

5. Get credit for your rent payments

Paying your rent on time isn’t always reflected on your credit, but you might be able to change that. Several services will help ensure your positive rent payment history is reported, which can help you build credit even without a credit card or loan. ERentPayment, for example, reports to Equifax and Experian credit bureaus.

The service does cost a small fee (eRentPayment charges $3 per transaction or $10 per month) and your landlord must be registered for you to be able to use it. If you’ve always paid your rent on time and your lease is in your name, it may be worth trying to get it reported on your credit.

Bottom line

The sooner you start building your credit, the longer credit history you’ll have — and that may translate to healthier credit. You can start building credit by repaying your student loans or by signing on as an authorized user on a family member’s credit card. You might also consider working on your credit with Credit Karma’s Credit Builder plan.

If you earn your own income, you can also apply for your own secured credit card to help you get started. Just make sure to practice smart credit habits, like charging only what you can afford and paying your monthly balance on time and in full.

If you read even a little about personal finance, you’re sure to run into the suggestion of starting a side gig for extra money.

A “side gig” is a term that describes any kind of work you do in addition to your regular job to increase your income.

If you want to improve your financial situation, it’s one way to go. The math is simple: With more money coming in, you have more cash to go toward paying off debt faster, padding your savings account or even investing.

But working more isn’t always the healthiest solution — or even possible — for everyone. Important questions to consider include how you get started, and how to balance a full-time job with a side gig without burning out or stressing along the way.

• Getting started with a side gig
• Balancing a full-time job with a big freelance workload
• 5 practical steps to managing your primary job and your additional work
• What $4,000 actually looks like when you work for yourself
• Making the leap to full-time freelance work

Getting started with a side gig

A few years ago, I was earning $28,000 per year from my full-time job, which wasn’t enough to keep up with my ambitious financial goals. I knew I needed to make more money if I wanted to achieve those goals.

I started by exploring some of my existing skills and figuring out how to leverage them to boost my income. My background is in research and professional writing, and I’ve always been obsessed with nailing financial success — so I started writing about it. I created my own personal finance blog and gained valuable experience writing about money. Before long, I was pitching ideas to magazines, newspapers, websites and blogs.

I wrote many of those initial articles for free. But then I started for freelance opportunities — and I landed them. The very first paid article I wrote was 500 words long and only paid $15, but it was a start.

Fast-forward three years (and a whole a lot of effort). Not only had I increased my skills and value as a freelance writer, but I’d even parlayed my experiences into a new full-time job with a salary of $47,000 per year. Add to that the $4,000 per month I was pulling in from my freelance work, and my financial goals were fast becoming my financial reality.

Balancing a full-time job with a big freelance workload

The biggest challenge in earning $4,000 a month from freelancing? Balancing a significant workload with the regular demands and responsibilities of a full-time job. When I started, I worked 80-hour weeks in an effort to make as much use of my time as I could.

Obviously, this wasn’t sustainable. During that period, I didn’t see my friends and didn’t spend much time with my significant other. My life turned into work, eat, sleep and repeat.

Still, this did allow me to eventually increase how much I charged for my work. And that meant I could take on fewer assignments and still make the same amount, which translated to a much healthier work-life balance. I slowly dropped the work that didn’t pay and took steps to align my schedule with how I value my time.

5 practical steps to managing your primary job and your additional work

Taking on additional professional responsibilities and tasks in addition to a job you already have can create chaos. I learned to rely on several tools and systems to keep me on track and save me from dropping the ball on my freelance work or my job.

Here’s how I managed my time and workload.

I used a task manager

The web application Asana (which offers a basic tool at no cost) tracked all my to-dos, and I mean all of them. It was my one-stop system for my personal tasks, work projects and freelance assignments. Everything was organized and sorted into different projects, but I could also see a master task list that I used to plan my days.

I scheduled everything

I scheduled my time down to the very last working minute. Again, this included chunks of time for personal needs along with job responsibilities and my freelance writing. I used Google Calendar to make sure I didn’t forget any appointments, meetings or deadlines.

I protected my work time tenaciously

I’m a writer, so of course I prefer communicating in writing. I would much rather email someone than get on the phone. Calls require you to sync schedules and they often go on longer than needed. Not to mention, stopping work to take a call disrupts your flow and productivity. So I blocked off days in my schedule that were just for work, and I refused to take phone calls or have meetings on those days.

I delegated some of my tasks to virtual assistants

Earning $4,000 a month didn’t just require a lot of writing — it required a lot of administrative work like scheduling meetings, sending invoices and researching new ideas to pitch. But I didn’t earn money for completing those tasks, so I hired virtual assistants to help me. I paid $20 per hour for their time — well worth it when an hour of my productive work time could be worth $100.

I prioritized my tasks

A few times, I had to cancel existing appointments and reschedule. I didn’t like doing that, but managing a lot of commitments means prioritizing. I always tried to learn from when I had to flat-out cancel, and I practiced saying “no” upfront when similar meetings came up in the future.

Most of the time, taking these actions allowed me to juggle everything successfully. But with so much going on, just one unexpected issue was enough to throw off my entire week. I made mistakes and had to deal with the consequences, but I learned some important lessons about how to manage a job and side gig.

Here’s how I dealt when things went off the rails:

• I reached out to my editors as soon as I could. If I even suspected I might miss a deadline, I reached out to the editor to let them know I was running behind. Giving them the heads-up meant they could work with me and possibly offer a deadline extension. While this still inconvenienced them, they were never surprised with a missed deadline.
• I canceled or declined nonessential meetings. When I simply didn’t have time for everything, I protected my days from anything that wasn’t essential. I declined coffee meetings and asked to communicate via email instead of through video or phone calls.

What $4,000 actually looks like when you work for yourself

I had to do a lot of work to earn that extra $4,000 a month — and that was only my gross — not net —income. When you take on freelance work, you don’t get to keep every penny you make. I put aside 30 percent of everything I earned to pay taxes on my additional income. Taxes on 1099 income are higher than on income you make as an employee who gets a W-2.

After taxes, $4,000 per month was closer to $2,800. I also incurred expenses to run my side gig successfully (like paying an assistant to help me, attending networking events and traveling to conferences where I could potentially get new gigs).

After taxes and expenses of about $1,000 per month, I was left with a net of roughly $1,800. That’s still a good amount of money to make on the side, and I used it to help me accomplish a number of financial goals, including:

• Maxing out my Roth IRA (in addition to funding my employer-sponsored retirement account from my day job).
• Contributing to a SEP IRA.
• Creating an emergency fund of $15,000.
• Building my travel savings to $5,000.
• Investing $10,000 in personal development (specifically, hiring a life coach, which was transformational).

Making the leap to full-time freelance work

Working both a day job and a side gig was fun because it provided me with a lot of discretionary income that I used to make incredible financial progress in just a few short years. But I also knew I didn’t want to do it forever.

Once I consistently made $4,000 per month on my own, I started thinking I could easily double that amount — and perhaps make even more than that — if I freelanced full-time. My day job still took 40 hours of my week, while I only freelanced about 10 hours per week. (Remember, I constantly worked to get higher-paying assignments so I could earn the same, or more, and work less.) If I could dedicate those 40 hours to freelancing, I figured I could actually earn more on my own.

In October 2016, I officially made the leap. I was terrified, especially because I had gotten used to the cushy life that a double income afforded. Before I quit my job, I took home $3,900 per month from my salary (before taxes or contributions to retirement accounts). Leaving might have meant cutting my income in half. But as it turns out, I was correct in my initial thought that I could make more on my own.

I grossed $14,725 in my first month of full-time self-employment — over $10,000 more than I made at my job! I didn’t receive any benefits from my previous position, either, so my expenses didn’t change too much when I switched to working for myself.

Next steps

Full-time self-employment comes with its own challenges that could fill a book, but I don’t regret making the change. My experience with taking on additional work taught me what I needed to know to successfully navigate the hard times, and today, I feel like I can take on anything that self-employment can throw at me.

If you’re in a situation where saving more money simply isn’t possible, or if taking other steps to get out of debt isn’t giving you the boost you want, you might consider finding ways to earn more instead.

Just be sure to think about how you’ll manage the additional load, and whether it’s workable along with the existing demands in your life.

Have an idea for a business, but not sure how to handle the financial side of launching your own company?

Whether you want to create a product or offer a service, finding funding for your initial costs to get started can present a challenge. You may feel like you have to find investors or a bank (or perhaps even a family member) to grant you a loan. But there are other options, including using a small business credit card to get your small business up and running.

Business credit cards give you benefits that other funding options, like loans, may not offer. But they can also become a burden if you lack a plan to pay off the balance. Here’s what you need to think about before using a credit card to fund your small business, including how it can help you and how to avoid some common pitfalls.

A small business credit card success story

Donovan Brooks used a credit card to start his business, a financial planning practice that serves millennials. Storyline Financial Planning launched in January 2016, soon after Brooks left his previous job.

“Utilizing the [card] for financing allowed me to launch my business as soon as I left my prior firm,” Brooks says. “It also gave me the flexibility to charge what I needed to at my discretion.”

Brooks used a credit card to launch his business because there wasn’t enough time to save for his initial costs, which included a laptop, a website and membership fees to professional organizations.

(Keep in mind that, while he didn’t have the money on hand at the time, he still had a plan to pay off his balance responsibly and before accruing heavy interest charges.)

So why not simply get a small business loan instead of charging these necessary expenses to a card?

“I initially did some research on traditional small business loans,” explains Brooks, “but in the end, I didn’t want to pay the interest on a loan or go through the loan origination process.”

The card Brooks chose offered a 0% introductory annual percentage rate on purchases and balance transfers for the first 12 months, which allowed him to finance his business start-up costs without paying a fee or interest for borrowing money. After the first year, the APR rose, as is often the case when introductory periods end.

He also says the card offered an initial cash back bonus, which a small business loan would not have provided.

Other reasons to choose a business credit card over cash or loans

If you want to launch a small business but don’t have the cash on hand, credit cards can help you finance those first few months — assuming you have a plan to pay off your balances responsibly, of course. But there are other reasons to choose a business credit card over other financing options.

• It may be faster to apply for a credit card. In some cases, you can apply for a business credit card and receive approval within minutes. In comparison, the time it takes to finalize a small business loan depends on the lender’s timeline, and experts suggest planning for a minimum of 60 to 90 days.
• It may be easier, too. When applying for a business loan, you may need to show more documentation than is required for a credit card application. Typical items required for many small business loan applications include personal credit reports, business credit reports, income tax returns, financial statements, bank statements, collateral and a number of legal documents depending on the loan’s specific requirements. While a credit card application will likely ask you for information about your business, it may not go into such depth.
• A credit card offers a revolving credit line. Starting a new business can mean dealing with an unpredictable cash flow. Business credit cards can help because they offer a revolving line of credit; in other words, the credit limit is the maximum that you can use at once, but the credit can be used repeatedly over time. A business loan, on the other hand, offers a fixed amount of money that you pay off in installments. Once you repay the loan, you’ll have to apply for a new loan if you need additional funding.

It’s important to note that a small business loan will likely give you easier access to cash, which you might need to pay your employees or vendors. Business credit cards typically charge a fee for cash advances. Cash advances are also subject to hefty interest charges with no grace period and should typically be considered a last resort.

Assuming you have plenty of cash on hand and don’t need a loan, credit cards can still be the way to go.

“I chose a small business credit card over a loan because I already had the cash I needed to launch the business, but I wanted to take advantage of the perks a reward card offers,” says Dan Kellermeyer, CFP.

Kellermeyer also says relying on a credit card instead of another financing method increased the efficiency of his accounting workflows — which is significant when you operate as a solo business owner in the early stages.

“Everything is online, and my card account even links up to Quickbooks,” which is a big time-saver, he says.

Potential pitfalls of using credit cards to get started

All the upsides of using a credit card to fund a small business don’t count for much, however, if you never generate the cash flow that can eventually repay the balance you put on your card.

“The downsides and pitfalls of using a small business credit card are the same as with personal credit,” says Brooks. These may include the following:

• High interest rates
• Added expenses through late fees
• Potential damage to your credit from carrying a balance or failing to pay your bills on time and in full

“If you don’t have a detailed exit strategy for revolving credit card debt, you could be setting yourself and your business up for failure,” Brooks warns. In his situation, he took precautions by first creating projections to determine if he could feasibly repay what he charged to his card.

He ran the numbers to check if his business could generate enough revenue in its first year to pay off the initial start-up costs placed on the credit card as well as the additional overhead to run the business on an ongoing basis.

What to keep in mind before using a small business credit card

Before following in the footsteps of entrepreneurs like Brooks and Kellermeyer, you should determine if using a credit card to fund your small business makes sense for you. You need a few important things in place before you consider using a credit card over other alternatives:

• First, map out a business plan and financial projections. These should show realistic estimates of the kind of revenue you can generate (and a timeline for doing so).
• When you have this information, you can plan what you can afford to put on your business card.
• Then, you’ll need to craft a debt repayment plan. This is just a way of understanding exactly how and when you’ll pay off your card’s balance after you launch your business.

You should also set aside time set to research all your options for funding your business. You can use anything from credit cards to loans, so you’ll want to compare the pros and cons of each and determine the best resource for your situation.

How to pick a small business credit card

If you do choose to fund your initial costs by charging them to a credit card, you’ll need a card that allows you to make the most of using it.

Look for credit cards that offer a low or 0% introductory APR on purchases and balance transfers. You’ll want to note when that introductory rate expires, and ask yourself whether you can pay off the initial expenses in that time to avoid being charged interest.

You may also want to look for a rewards credit card that offers cash back in categories you spend the most on for your business. This way, you can make the most of every dollar you spend.

Bottom line

When used responsibly, credit cards can be an appropriate option for short-term financing. But due to high interest rates that can cause debt to snowball quickly, racking up a big balance that you don’t repay can be too costly for your new business to handle.

To put it simply, you need a business plan in place before you make charges on a business credit card. Without seeing the projected revenue numbers, you may struggle to figure out how you’ll repay your start-up costs down the line.

Your smartphone can take high-quality photos, store files and access email. And if you use a mobile wallet, it can also take the place of a physical credit card.

A mobile wallet is pretty much exactly what it sounds like: a “wallet” that lives on your mobile device instead of in your back pocket.

So, why might you want one? Because it provides a convenient way to pay for goods and services with your smartphone, smartwatch or another compatible device, like a tablet.

It can manage all your credit cards, loyalty club memberships and reward cards, and it may help to reduce fraud, too, as mobile wallets are generally harder to steal or copy than physical cards and cash.

You can access a mobile wallet through several smartphone apps. Many companies, like Apple and Android, offer versions of a mobile wallet. Most credit card issuers offer their own versions, too, making it easy to connect your cards and accounts.

Before you download a mobile wallet to use, let’s take a closer look at how they work and why you might want to start using this payment method.

• The upsides of switching to a mobile wallet
• How does a mobile wallet work?
• Where can you use your mobile wallet?
• Are mobile wallets secure?
• Choosing the right mobile wallet for you
• At a glance: Popular mobile wallets

The upsides of switching to a mobile wallet

One big advantage to using a mobile wallet is that it eliminates the need to carry around a fat wallet with multiple cards.

Using a mobile wallet can be convenient, and you don’t have to worry about losing or misplacing a card. Plus, transactions are processed quickly.

Mobile wallets also have increased security over some other payment options. More on that in a bit, but first let’s see what a mobile wallet looks like in action.

How does a mobile wallet work?

This one’s simple. Start by downloading the mobile app of your choice onto your smartphone or other compatible device. Then, load the card information you want to store, from debit and credit cards to loyalty cards and even coupons.

When you want to make a purchase with your mobile wallet, you can either:

• Choose your app and select a card at the checkout screen when you’re shopping online with your smartphone.
• Tap your phone to a digital payment-enabled terminal at participating merchants when checking out. Mobile wallets use what is called a near-field communication, or NFC, chip. It’s the same technology that lets you use contactless payment to pay with a physical card.

Where can you use your mobile wallet?

Many retailers offer updated payment-processing terminals that accept mobile wallets. Samsung Pay and Apple Pay, for example, are accepted at millions of stores in the U.S. And e-commerce companies like Shopify have adapted their systems to mobile wallet technology.

Given how many merchants accept mobile wallets nowadays, you might want to add an everyday cash back card to your wallet and use it to make daily purchases.

Are mobile wallets secure?

Information that you upload to a mobile wallet gets encrypted, making it potentially safer than carrying physical cards with you.

Using a mobile wallet could pose security concerns if your phone is lost or stolen. That’s why it’s smart to use something like two-factor authentication, which could include setting up a personal identification number or a fingerprint requirement to unlock your phone.

You can also protect your data by installing apps that will help you locate your phone if you lose it or remotely wipe the data so a thief can’t access sensitive information or use your mobile wallet. If you see any suspicious or unauthorized charges on your account(s), it’s a good idea to immediately change your password and call your bank to let it know.

Choosing the right mobile wallet for you

Many mobile wallets offer similar features and security measures. The right one for you depends more on personal preference and how you like to interact with your apps. It may also depend, of course, on which devices or credit cards you own.

In terms of performance, there’s little difference between the leading mobile apps.

At a glance: Popular mobile wallets

Bottom line

Mobile wallets may offer more convenience and security than a traditional wallet. And they’re widely accepted at retailers around the country.

Which mobile wallet you choose will depend largely on the kind of device you want to use it with. Don’t sweat the choice too much: Many of the popular options are similar in terms of performance and the level of security they offer, so you can choose the wallet that pairs best with your smartphone and use it with confidence.

*Approval Odds are not a guarantee of approval. Credit Karma determines Approval Odds by comparing your credit profile to other Credit Karma members who were approved for the card shown, or whether you meet certain criteria determined by the lender. Of course, there’s no such thing as a sure thing, but knowing your Approval Odds may help you narrow down your choices. For example, you may not be approved because you don’t meet the lender’s “ability to pay standard” after they verify your income and employment; or, you already have the maximum number of accounts with that specific lender.

Credit cards can get a bad rap.

After all, they can quickly lead you to a load of debt if you charge more than you can afford to repay. But when managed responsibly, using your credit card can protect you and your purchases.

That’s partially due to credit card purchase protection, a form of coverage if something you buy with your credit card is damaged or stolen. This is typically in addition to basic protections laid out in the Fair Credit Billing Act for all consumers, which protects you against unfair billing practices and provides you with a mechanism for addressing billing errors, such as being charged for items you did not receive.

When it comes to your individual credit card’s purchase protection, it’s important to know that not all purchases will qualify. You will also need to follow a claim process within a certain amount of time from the date your item is stolen or damaged.

Read up on what’s covered and what’s not, and know how to use your purchase protection benefits so you can make the most of them if you need to file a claim.

• What does credit card purchase protection cover?
• Know your credit card company’s purchase protection policy
• How to file a credit card purchase protection claim

What does credit card purchase protection cover?

It’s often easier to understand what’s not covered, because policies are more explicit about what they will not include. “Services, tickets, perishables and gift cards generally aren’t eligible,” explains Ben Brown, CFP®, EA and the founder of financial planning and investment management firm Entelechy.

“Boats, cars, or other motorized vehicles aren’t typically eligible for purchase protection, and would be covered under a separate insurance policy,” says Brown, adding that credit card companies are unlikely to cover items that experience normal wear and tear.

Some items that may be covered include …

• Clothing
• Electronics
• Home and garden products
• Personal care items

As an example, let’s say you purchased a handbag two weeks ago and you left it in your car overnight. If your car was broken into and the handbag was stolen, the initial purchase might be covered under purchase protection if you have the original receipt, your credit card statement showing the transaction, and a police report documenting the break-in.

Chase, for one, defines what’s covered as stolen or damaged eligible personal property within 120 days of when you purchased the item.

Good to know: Protections for damage and theft do exist but they usually don’t cover what some companies call “mysterious disappearance.” Visa, for example, defines this as anytime an object goes missing without explanation and without evidence of a wrongful act committed.

Are there monetary limits to purchase protections?

The amount your credit card’s purchase protection covers varies depending on the credit card company.

Most policies cover up to a certain dollar amount, anywhere from $500 to $10,000, per claim. Also, total coverage cannot exceed a certain dollar amount (typically $50,000) per account or per year.

Know your credit card company’s purchase protection policy

Request a copy of the terms of or a guide to your card’s benefits before you get into a situation where you need to file a claim.

The specifics of what’s covered and what’s not, along with the process for filing, doesn’t just vary between card payment networks like Visa® and MasterCard®. Each individual card issuer, such as your bank or credit union, can also follow a different policy.

You will need to contact your credit card issuers directly. Ask about your card’s benefits (and where you can get a copy).

Related: How to avoid interest with a credit card grace period

These guidelines should explain …

• Who’s covered
• Which transactions can receive purchase protection coverage
• The dollar value limit of coverage per claim and per account
• Deadlines to file eligible claims

How to file a credit card purchase protection claim

Again, policies and requirements vary from card to card. But in general, you’ll need the following documentation to file a claim if you want to use your card’s purchase protection benefits:

• An itemized store receipt
• Your credit card statement showing the posted transaction
• A police report (if a purchase was stolen)
• Any documents that support your case of why a transaction should be covered by your card’s benefits

To start the claims process, you can call the customer service number on the back of your card. You can also run an online search for “[your credit card] + file a claim” to find and use your credit card company’s online claim form.

Once you access the form, fill it completely, sign it, and submit it for review (either through the online claims form, or by mail according to the instructions your credit card company can give you when you call).

Remember that you need to start the claims process as soon as you realize an item is stolen, damaged, defective or may otherwise qualify for purchase protection. If you have questions, call the customer service number on your credit card. Your credit card company’s representatives should be able to provide the answers you need or direct you to another representative who can assist you.

What should I do if something I bought with my credit card was stolen?

File a police report.

You may need to include a copy of the report with your claim to the credit card company.

Bottom line

Almost all credit cards offer some degree of purchase protection, and can be applied in a variety of circumstances. Using your benefits can help you avoid losing money on an item that was lost or stolen.

Just be sure to act fast. Most protection policies only cover transactions for a certain amount of time, so you should file your claim as soon as you realize something is amiss with your purchase.

Be ready to provide itemized receipts, statements, police reports and other paperwork to support your claim. “The process and documentation requirements may seem like a hassle,” says Brown, “but can be well worth your time for big ticket items.”

*Approval Odds are not a guarantee of approval. Credit Karma determines Approval Odds by comparing your credit profile to other Credit Karma members who were approved for the card shown, or whether you meet certain criteria determined by the lender. Of course, there’s no such thing as a sure thing, but knowing your Approval Odds may help you narrow down your choices. For example, you may not be approved because you don’t meet the lender’s “ability to pay standard” after they verify your income and employment; or, you already have the maximum number of accounts with that specific lender.

Before we talk about what a secured card deposit is, let’s go over some basic info about secured cards.

Think of a secured credit card as a sort of learner’s permit. It’s designed to help you build or rebuild credit with careful use. This can be especially helpful if you’re just starting out on your credit journey or if you’ve encountered some rough patches along the way.

The idea is that you can use a secured card to get your credit on the right track, so that one day you’ll be able to advance to the next level — an unsecured card. You don’t need a great credit history to apply for a secured card, but you do need something else: a deposit.

What is a secured card deposit?

A secured card deposit is money you put down when you open a secured card. In a sense, secured cards are similar to debit cards in that you need to have cash in your account in order to make a transaction.

That may be a helpful comparison, but keep in mind that payments on your secured card aren’t automatically deducted from your deposit amount. You’ll need to make your minimum payment by the monthly due date if you want to build a healthy credit history. We’ll address this more in a bit.

Why do I need to put down a secured card deposit?

Banks and credit card issuers require deposits on secured cards because they’re wary of taking on potentially risky customers.

A security deposit is there in case you don’t pay off what you’ve charged on the card. Your card issuer will use that to pay off whatever balance you have.

What does a secured card deposit mean for my credit line?

In most cases, whatever cash deposit you put down becomes your credit line. So if you put down a deposit of $1,000, your starting credit line on that card will be $1,000.

In some rare cases, a bank or credit card issuer may offer access to a credit line that’s slightly higher than the amount of your deposit.

What’s the minimum amount required for a secured card deposit?

Many cards require a deposit of at least $200 to get started, though the exact terms and conditions may vary.

If you want a much higher credit line than that, be aware that most cards have a maximum you can deposit. This varies depending on the card. The max amount you can deposit may be determined by factors such as your income and creditworthiness.

What happens after I make my deposit?

After you make a deposit, you can start making purchases with your credit card. As with a traditional credit card, you’ll receive monthly statements showing the balance due. To avoid paying interest on your balance, you’ll need to pay off your balance in full and on time each month.

This is where secured cards can present as much of a risk as unsecured cards. You can still accumulate debt if you make purchases and fail to pay your bills on time. The amount you owe can quickly grow beyond the deposit you made, thanks to interest.

So yes, there are risks involved. But if you consistently make on-time payments, don’t carry a balance and don’t accrue interest, a secured credit card can be a great way to build credit.

Will I get my secured card deposit back?

You’ll want to double-check the terms and conditions, but in most cases the answer is yes. You’ll typically get your deposit refunded once you’re ready to close your secured card account and you’ve paid off all your balances.

Bottom line

To recap: Your secured card deposit relates to your credit line in that it usually establishes the limit on your card. In most cases, you can’t charge more than the deposit you put down on the card.

This may sound restrictive, but try to look at the bright side. A secured card can help you manage your spending and keep you honest, since your credit limit is tied to the actual money in your account.

A good rule of thumb, here and always, is to use your card responsibly.

Financial success doesn’t happen overnight, and it’s not the result of making the right choice on one major money decision.

Of course, you have to start somewhere. That’s why we’ve highlighted three key components of personal finance — building a budget, eliminating debt and investing your savings — to help you build a solid financial foundation for long-term success.

How to build a solid financial foundation

1. Understand your cash flow and build a budget that works.
2. Eliminate debts that drag down your financial health.
3. Take your savings to the next level with the right investments.

1. Understand your cash flow and build a budget that works.

Let’s get one thing straight: “Budget” is not a bad word. And yet so many of us shy away from building our own budget for a number of reasons: It’s too boring, too restrictive, too complicated, too pointless.

That’s a problem because budgeting is perhaps the single most important tool you have when it comes to managing your personal finances.

It’s the tool that allows you to understand how much money goes in each month and how much goes out, helping you stay on track with your goals and use your money exactly how you want.

“A budget allows you to know your cash flow, which guarantees you aren’t overspending,” says Erin Lowry, author of “Broke Millennial: Stop Scraping by and Get Your Financial Life Together.” “Spending less than you earn is a cornerstone of financial health, so a budget — whether or not you call it a budget — is part of that success.”

If you’ve never made a budget before, here are some steps to get you started:

• Track your cash flow. “Sit down and write out how much you have coming in each month as well as set costs going out, like your rent, cellphone bill, student loan payments, transportation costs and utilities,” Lowry suggests. This will give you an idea of how much of your income you can use for flexible spending on nonessential items and how much you can allocate toward savings goals.
• Start automatic contributions. Setting up automatic weekly or monthly deposits from your checking to your savings account means you don’t have to think twice about saving and ensures you won’t forget to move money over. “Never skim money out of financial goals to fix overspending,” Lowry warns. Try and cut spending on nonessentials first.
• Stick to it. It’s hard but don’t fall off the wagon. “Don’t listen to the lectures about how X budget is superior to Y budget. It’s only superior when you actually stick to it,” Lowry says.

If you do get off-track, don’t quit budgeting — simply try something new until you find a system that works well for you.

You can also prevent falling off the wagon by being proactive. “Weekly money check-ins are a simple way to spot that you’ve gone off track early enough to course-correct,” Lowry says.

2. Eliminate debts that drag down your financial health.

If you have debt, allocating some of your cash flow to paying down those balances is the next step in building a strong financial foundation.

Maybe you’ve heard the phrase “good vs. bad debt” and wondered how any debt could be possibly be good.

In general, “good debt” is debt that allows you to leverage your money to gain an asset. A mortgage, for example, is debt, but it allows you to buy a home today and pay it off over decades.

In the meantime, the home addresses your basic human need for shelter. You can also use your home as an asset by renting it and earning income, or by potentially earning a greater return when you go to sell if the value appreciated over time.

Credit card debt, on the other hand, is a type of “bad debt” in the sense that it doesn’t allow you to build an asset. It’s just money you need to repay with interest.

“Getting rid of any debt with no corresponding asset is essential to financial success because it naturally increases your net worth and frees you up from cumbersome payments,” explains Katie Brewer, CFP® and founder of financial coaching service Your Richest Life.

According to a 2016 study conducted by NerdWallet, the average credit card debt per indebted American household is nearly $17,000, which may suggest that many people with balances struggle to get them under control and paid off.

Where should you start if you’re ready to pay down debt for good? Here are some first steps to help get you on track:

• Get organized. Write down all your debts that you need to pay off in one place. Note the source of the debt, the amount of the balance and the interest rate.
• Pick a payment plan. You may need to make some changes to your budget and your lifestyle as a whole to make debt freedom a real possibility. “You can either prioritize [debt repayment] by interest rate and pay off the ones with the highest interest rate first, or prioritize it by smallest balance to largest balance and pay off the smallest balance first to get the momentum going,” Brewer says.
• Take a break from your credit cards. If you struggle to pay off credit card balances, it may be a good idea to take a hiatus from your credit cards to avoid digging yourself further into a hole of debt. Brewer suggests limiting yourself to using a debit card or setting aside cash in an envelope.

3. Take your savings to the next level with the right investments.

If possible, your budget should include setting aside money for savings. To start, set a goal of creating an emergency fund that houses 3 to 6 months’ worth of expenses.

From there, you can create other specific goals you want to fund or simply aim to save a small percentage of your income for the future. You can start with just 1 percent and incrementally raise that rate over time to save more.

But there’s one big downside to having a lot of cash sitting around: It’s not doing much for you. The best savings interest rates hover around 1 to 1.25 percent. A high-yield checking account may garner more (up to 5 percent) but these accounts typically have balance caps.

It’s nice that your cash can earn a little extra money for you, but those interest rates probably won’t beat the rate of inflation over time. Also, these interest rates may be subject to change over time.

Think about it: If you put $10,000 in the bank today, it will likely be worth less than $10,000 in 30 years when adjusted for inflation. With only a 1 percent return, you’re looking at only $13,478.49 after three decades of saving.

Bottom line

Taking these three steps to build a solid financial foundation today can help you work toward long-term financial success.

Need cash, but only have your credit card?

Normally when you use your credit card to make a purchase, you charge the cost to your line of credit and then pay for your purchases in a statement later. But did you know you can also use your credit card to access cash?

Using your credit card to get cash instead of buying something is a cash advance. You can make the transaction at a bank or ATM, or by cashing checks provided by your credit card company at your local bank.

But this transaction comes at a cost. On top of repaying the cash you borrowed, you’ll likely pay a high APR on the balance. Before you use your card to get cash, know what the fees look like and understand the alternatives.

• How much does a cash advance fee cost?
• Cash advance costs for popular cards
• When a cash advance makes sense — and when it doesn’t
• How to avoid getting hit with a cash advance fee

How much does a cash advance fee cost?

Credit cards often come with different fees, APRs and terms. It’s critical to read the fine print on the specific card you hold or want to open.

For cash advances, most companies charge a flat fee or percentage of the transaction — whichever is greater. Some banks will vary the amount based on how you access the cash.

But the fee isn’t the only cost associated with cash advances. You’ll pay interest on the transaction, too. This is different than the interest on normal balances because it starts accruing immediately without a grace period.

Here are a few examples of credit cards and how they charge for cash advances.

Cash advance costs for popular cards

Before you apply for a credit card, check out its fees, rates and terms, as they may change based on the Prime Rate. Banks and financial institutions that issue credit cards include copies of the card agreement alongside online applications, so review that document first.

For cards you already own, look at your billing statement or credit card agreement. You should find the same disclosures there. If you have further questions, call your credit card company and speak with a representative.

When a cash advance makes sense — and when it doesn’t

A cash advance can help you get the funds you need to cover an emergency expense that you can’t charge to your credit card.

The only pro of a cash advance is that it provides fast access to cash. On the other hand, you’ll have to pay an upfront fee plus the high interest rate you’ll pay on that advance if you can’t repay it right away.

A cash advance can get you out of a tight financial spot if there are no alternatives, but it’s best to plan ahead to avoid taking one. The high total cost tends to outweigh any benefit.

How to avoid getting hit with a cash advance fee

Want fast access to cash without the fees? Smaller institutions may provide solutions.

Consider getting a card from a credit union. They may offer card options that don’t charge a fee for making cash advances.

Bottom line

Consider asking if the person or company you need to pay will accept the credit card itself as a form of payment or not making the purchase at all if it’s an option.

If you need the cash, look to other sources first. You may need to reduce another line item in your budget for this month to free up cash flow or tap into your emergency fund to cover an unexpected cost.

Or, if you’re looking for a back-up plan, try carrying a small amount of cash for emergency situations. That way you’ll have cash if you need it and will avoid any fees to get it.

*Approval Odds are not a guarantee of approval. Credit Karma determines Approval Odds by comparing your credit profile to other Credit Karma members who were approved for the card shown, or whether you meet certain criteria determined by the lender. Of course, there’s no such thing as a sure thing, but knowing your Approval Odds may help you narrow down your choices. For example, you may not be approved because you don’t meet the lender’s “ability to pay standard” after they verify your income and employment; or, you already have the maximum number of accounts with that specific lender.