Written by Alina Murcar, Marketing Coordinator
Many things become available to youth when they turn 18 - you can legally sign your own documents, buy a lottery ticket, get a tattoo (which was my official "adult" choice), vote in elections and so much more. Not only did getting a tattoo at 18 seem like a good idea (and I still love it today!), but another thing that crossed my mind was, "Should I get a credit card?". Most people would start waving a giant red flag here - and with good reason. I wanted to share a few things I learned from my personal experience with having a credit card at a young age in hopes that it helps you decide if you're ready for one!
The first thing you should always think about BEFORE you do anything that can have larger repercussions is: What are my intentions?
If the reason you're getting a credit card has anything to do with having access to more money to do things you WANT to do, you're probably best off waiting a few more years.
If the reason you're getting a credit card has anything to do with helping out with your NEEDS or using it to build credit, it might be a good idea to open up a credit card with a low available balance. For example, you could start off with a credit card that has $500 available on it.
Here are a few incredibly important tips to follow:
Find a credit card with a LOW INTEREST RATE. Don't let big banks and predatory lenders trick you into thinking that 15-20% interest on a credit card is normal...because it's not.
Avoid opening a credit card with an annual fee. There are options without that elsewhere and that's the best place to start.
Spend some time doing research. The more you know, the less likely you will be taken advantage of and/or lose track of your finances.
Only ever use half of what you have available on your credit card. So for example, if my credit card has a $500 limit, I should never spend more than $250 of it. Aim for lower, if possible. Owing more than half of what's available will hurt your credit (ouch - that one got me a couple of times!).
Try to pay more than your minimum payment. If you can pay off your credit card balance right away, do it! If you wait until your payment is due, part of it will go to interest. If you pay it off right away, you will most likely pay nothing in interest.
Don't keep your card accessible in your wallet to use whenever it's convenient. Keep it somewhere you have to purposefully find it in order to use it. I even heard of someone who froze theirs in a glass of water and had to de-thaw it in order to use it. Now that's what I call a well-thought-out strategy!
Set yourself boundaries. Use your credit card for very particular things and stick to just those. For example, use it for gas and groceries. Then pay it off quickly. Avoid using it for luxury items like coffee runs, clothes, video games, etc.
Always, always, always make your payment on time. Paying your bills HAS to come first before anything else. This will build a great habit for you as you get even more bills further into your "adulting" life.
Whew! That's a lot to absorb! Here's what I'm wondering - how come they don't teach you this very applicable and necessary stuff in school!? That's why we feel it's so important to help educate every young adult about this and other financial topics. I hope these little tips will help you move forward with more confidence and help make your decision!
What it comes down to is if you carefully utilize the credit available to you, you'll end up building a solid credit score. A good credit score means you'll have an easier time purchasing a car, a home, and it will give you a better chance at job opportunities down the line. And trust me, you will thank yourself later for building good credit at a young age (I already am and I'm only 24!). Take care of your future self!
If you're looking for a good place to start, we'd be happy to chat with you! Our Member Advocates are here to do just as their title states - be an advocate for your financial wellness!
P.S. I highly recommend downloading the Credit Karma app! It monitors your credit score on two different credit bureau's scores, and it's totally FREE. This app can also help you monitor fraudulent activity. I use it all of the time!