As the daughter of two accountants, I grew up with lessons about financial responsibility. Only spend within your means. Endorse your checks on the back before depositing them. Read your monthly bank statements.
When I entered college last fall, I opened a bank account at a bank since I only had a savings account at my local credit union back home. I got my first debit and credit cards. Most of my friends and peers had a debit card account since high school, but I was the first to get a credit card account.
I think credit cards can be daunting for teens. We mostly hear about people not paying their credit card bill on time or having a bad credit score, which makes it sound difficult to keep track of a credit card. Like most things in life, it took a little time to get used to, but now I feel confident using my credit card and know how and when to pay my bill. It really came down to common sense. Don’t go crazy and buy things you could not previously pay for with your debit card or cash. Just because you have a credit card now does not mean you can go on an Urban Outfitters shopping spree, buy that Coachella ticket, or go out for food every day unless you are making enough money to be able to afford that, in which case please use some of that money to donate to a charity.
Here’s what I’ve learned from having a credit card for six months.
1. A credit card account is just like a debit card account, except at a certain point every month, you need to pay the amount on your bill, which could be as easy as transferring the amount from your debit account to your credit card account.
2. Read your credit card statement when your credit card payment is due and check for any spending that isn’t yours. You will receive a bill well in advance, so you WILL know what day you need to pay off your balance by. You can even schedule payments online for a specific day in the future so you don’t need to worry about remembering to pay.
3. It’s not too hard to start building good credit. Credit scores vary from 300 (poor credit) to 850 (great credit). Paying your bill on time and not spending your credit limit (mine’s currently $1,000) will put you on the right track. Having good credit will help in the future because lenders will see you as low risk and will give you lower interest rates when repaying loans (think of your future house or car).
4. Keep track of your spending weekly. I usually check my spending at least every week and calculate how much I will have left in my debit account (because that has a minimum balance) after I pay my credit card bill. There are several apps that can help you see how much you are spending. Some banks have their own apps, but I also use Mint, which shows my debit, credit, and savings accounts.
5. Put your credit card somewhere you won’t lose it. Whether it’s a wallet or some sort of other card holder, make sure you know where it is at all times. This will save you a lot of trouble. If you lose your credit card, make sure you call your credit card company immediately (and probably your parents as well). I have my credit card company’s phone number in my contacts list just in case.