Since my money series is really bits and pieces of things I want to make sure I tell my kids, I thought I’d do a list of a few “random thoughts” about debt… credit cards in particular since that is the first kind of debt they will likely be exposed too…or tempted by… (part two of last week’s money post on debt).
1. Not sure what age you can actually get a credit card, but you want to make sure you are mature enough to handle it, but still a student since it is easier to get when you are going to school. Some people think it’s smart to wait a long time to get one, but it actually is not a great idea to wait too long. You need to build up a good credit history, and you can only do that if you have credit and use it wisely. They give students credit cards much more readily than non students who are working. So get a card as a student with a low limit ($500), use it wisely and build your credit rating up.
2. Even if you go off, get married and have everything joint, make sure you keep one card in YOUR name. NOT as a secondary card (many times you can have joint account with one person as “primary” and one person as “secondary”. If you are secondary – it doesn’t count for your credit). So, make sure you have 1 card where you are the primary to build up your credit rating in your name.
3. That being said, have a max of 2 cards (one in your name for sure:). Stick to using one card that gives you some good rewards! Be careful though as many reward cards have a yearly fee. Make sure the rewards you are getting are worth more than the annual fee you are paying!
4. Use your credit card for convenience. Use it when you have the money. Never, ever, pay interest. Pay your card off by the due date each month.
5. Never use your credit card for a cash advance. When you make a purchase on a credit card, you do not pay interest right away. You have a “grace” period where you can buy the item and not pay interest as long as you pay your bill off by the due date (same date every month so get to know when it is so you are always ready to pay it on time). But, if you take a cash advance (withdraw money directly from the credit card) you start being charged interest right away.
6. Always ask yourself the question: If I had to pay cash, would I buy this? This often avoids impulse spending….
7. Check your monthly statement! Like I said before, get to know when your bill is due so you will never be late. The second you are late, you pay interest!! Check over your statement too…you will be amazed at some of the errors you can find occasionally!
8.Remember, if your name is on the card – you are responsible for it. If you are the primary card holder, you are responsible. Even if the secondary person racks up all the bills and then flakes out – you are stuck with paying or it will hurt your rredit rating.
That’s it for now!