Tips for Young Adults Using a Credit Card for the First Time

Credit cards and young adults have gotten out of control which is why new regulations have recently been implemented thanks to the Credit Card Act. Now if your under the age of 21 and can’t prove you have sufficient income then you will have to have a co-signer. Even with the new laws in place, young adults, especially students are still a big source of income for the credit card companies. Unfortunately, it is way too common for our young people to have the money grows on trees mentality. Sometimes it takes us years and many mistakes later to figure out that’s not how it really works. This article is for those who are just now getting ready to start using credit cards. Here are some tips to help get you off on the right foot and down a path of financial bliss.

• Understand the terms of the card: You should really understand the card terms before you even apply so you know if its worth applying for. If you didn’t do that, definitely make sure you know how the card works before you start using it. You want to know things like what’s the interest rate, what are the fees, and what is the payment schedule. If you have a rewards card then your going to want to know what types of purchases you earn rewards on.
• Beware of 0% teaser rates: Low interest rate offers are definitely appealing, that’s why cards offer them. Don’t let this trick you into thinking you should spend more than you can afford. You do still have to pay it back even if it is at a low rate.
• Learn about what interest really is: You might think your just putting a $20 pizza and a $50 pair of shoes on your card, but once a 20% interest rate is figured in there it gets much more expensive. If you don’t pay your balance off each month your going to be charged interest.
• Only use the card for normal purchases: This is one rule that any credit card user should stick with. Only make purchases with your credit card if you would make those purchases with cash. This would include purchases like groceries, gas, or bills. If you wouldn’t normally go buy a flat screen t.v. then don’t put one on your credit card. This is how you will get in trouble.
• Pay on time: Always, always, always pay your bill on time. This will help you build good credit. Even if you can’t pay the full balance, you must at least pay the minimum amount due on time.
• Pay in full: To avoid costly interest charges, you should always try to pay your bill in full. Make an agreement with yourself that every time you get paid you are going to make a payment on your card.
• Don’t go over the limit: Never go over the credit limited you have bee awarded. If you do you will probably get an over the credit limit fee (if the card charges one) and it can even be reported to the credit bureau, thus having a negative impact on your credit.

Since its your first time using a credit card you could consider using a secured card instead of a traditional card. This will offer you some extra security as you learn how to manage your fiances. A secured card is one that requires a security deposit to be placed on the account before you can start using the card. Typically, the amount you deposit is the amount of the credit limit you receive. You still make monthly payments and your still charged interest with these cards. If you fail to make your payment then the card issuer has your deposit as collateral.

Another option would be a student credit card. One great benefit to these cards is they are geared towards your likes. For example there are student rewards cards that benefit those who buy books or school supplies by allow you to earn points for those types of purchases. This would be a great way to get familiar with using a rewards card and learning how to maximize your points. ,