I know from personal experience that when you’re 18 and you get a credit card, it’s like Christmas. You charge everything with the attitude of, I don’t have to pay for it now, all I have to do is make the minimum payment which is true but will ultimately get you in deeper than you ever imagined. Has this ever happened to you? You open some mail and there it is, a brand new credit card with your name on it and all you have to do is call and activate and bam, you’re free to go shop the day away.
It happened to me and let me tell you, I wish I would have been much wiser with my credit. After my initial spending spree and the onslaught of bills, I settled on a few rules for myself to help curb credit card spending and maintain a good credit rating. I would like to share my advice in the hope that I can help some younger people not make the same mistakes that I have made. Most credit cards offered to young people almost always have a ridiculously high interest rate to the point that making the monthly minimum payment merely counteracts that or “feeds the demon”.
When starting off, you will usually have to deal with high interest rates as you are building your credit but if you receive any offers with an APR (annual percentage rate) of more than 18%, throw it away! I found that in the long run you end up paying close to double of the price of any item that you put on a credit card if you make minimum monthly payments only. Is a Cd worth 30 bucks? How bout $14 for beef jerky and cigarettes? Its never a good idea to use your credit cards on consumables or items that will most likely be gone in a matter of months. Try using your card for one exclusive thing such as gas or school supplies for college and stay away from using it for luxury items and things such as fast food, dvds, cds and any other thing that if you wanted bad enough, you would save up the cash and buy it out right.
I found that leaving my credit card at home is a good deterrent to spending. If you go clothes shopping and pass by Tower Records, if you’re a music fan, chances are that you’re going to walk in a spend a little more than you anticipated. If you don’t need your card for a particular purchase, leave it at home. It’s always good to have a credit card in emergency cases but it should not be abused.
I didn’t listen when my parents tried to warn me of the downside of credit cards and I have dealt with my ignorance over many years of collections and struggle to bring my credit rating back up. In this day and age, a good credit score is vital to such things as buying a house or car and getting good rates on those purchases. Not everyone is foolish with their credit cards but the ones who are, heed my warning. I can’t think of one thing that I purchased on a credit card from my late teen years that I still have. Spend wisely and set boundaries. A credit card is not free money so don’t treat it as such.