High schools should require a class on money, particularly on how to deal with personal finances and those seductive little things called credit cards. It would be way more useful than, let’s say, geometry. In my experience, the only thing geometry was ever good for was talking to my classmates about sex and the latest scandal on The Real World. Perhaps if I had learned a few things about interest rates and responsible spending I wouldn’t have had the financial woes that I did after I graduated college. I ended up paying for my ignorance, literally, when I maxed out my card, incurring many $75 late fees and hundreds of dollars of debt.
Some things have changed since I got my first card at 18, the age at which it is legal to apply for one in your own name. The Credit CARD Act of 2009 keeps credit card companies from marketing on campus and requires that anyone under the age of 21 have a co-signer who will make sure outstanding balances are paid. Still, even with those safeguards, credit card companies will DO ANYTHING FOR YOUR SOUL. Once you come of age, you will most likely get endless offers for cards in the mail. And the thing is, getting a credit card is not really something you can completely avoid. You will need a good credit score later when you want adult-y things like your own apartment, house, or car, and being a responsible credit card user will help you earn that score. So here are some tips for doing it right. Basically, if you’re smart and keep your eyes on the big picture, you’ll be just fine.
Choose a card that has a low APR and no additional fees.
If you’re like, “But Rie, what the hell IS a low APR?,” I can tell you: APR stands for annual percentage rate, which is the rate of interest you will be charged over the course of a year if the full amount charged isn’t paid on or before the monthly due date. You may find a card that has a zero percent introductory rate for, say, seven months. This means that you won’t have to pay any interest on whatever you don’t pay off for seven months. Awesome! But after that, it will most likely default to a much higher APR depending on your credit worthiness. Many student cards can start at around 20 percent, so try finding one that is MUCH lower. An ideal APR would be below 10 percent. Also, many department store cards are high, so even though it’s really tempting to get that Macy’s card to save on your first purchase, you really shouldn’t, because you’ll probably end up owing way more than you initially saved thanks to a 25 percent APR. There is also the possibility of monthly or annual fees. Some card companies will charge you anywhere from $25 to $100 or more just for using their services!
Stick to one card.
It is a lot easier to manage one of these guys than it is to juggle multiple sources of temptation. And believe me, you WILL be tempted, especially if your friend pulls out a Hello Kitty Visa to pay for her new leather shorts. “A HELLO KITTY VISA?!? I GOTTA GET ONE OF THOSE ASAPS!” is what you will scream. Hold up girl, do you REALLY need another card? And what if that Hello Kitty Visa has a 30 percent APR!??
Pay your balance in full each month. If you can’t, pay as much as possible.
This is SUPER important. If you keep charging and charging things to your card while only making the minimum payment, you’ll end up paying more in finance charges (aka the interest) while not making much of a dent in your growing debt. Always pay more than the minimum required! Do not make the mistake of thinking that a card allows you to buy what you can’t afford and that Future You can worry about it. Whenever you pay with a credit card, think of the price tag in terms of actual cash money, with even MORE money (for the interest) stacked on top of it. Or else envision that it’s your actual paycheck that you are handing over to the cashier. This is really, really hard to do, which is why lots of people find themselves shocked by their monthly bill and unable to pay it. Just remember, you WILL have to pay for everything later, and if you aren’t careful, you’ll end up having to pay a lot more than the original worth. A cheeseburger and a bucket of raver beads that I charged in 2001 probably ended up costing me $200 in the long run. And NO, the burger wasn’t made of gold.
Never be late on your payments.
Forgetting to pay your bill will definitely fuck up your credit score and will probably cost you a fee of usually around $30. Annoying! Write your bill’s due date in your calendar, set an alert on your phone—do whatever it takes to help you remember to pay on time. And of course, do not go over the limit! That could cost you an additional fee.
Pay attention to what you buy.
So much of our personal information is processed via computers these days, making it much easier for those asshole thieves to gain access to our credit card numbers. Always keep a close eye on your statements each month to make sure all of your purchases were in fact made by you. One time I got a call from the po-po saying there was some suspicious activity on my credit card due to a shopping spree at Fry’s Electronics in some town I never heard of. First of all, who do you think you are, spending my hard-earned CASH MONEY? And second, HOW DARE YOU try to buy a fancy camera with my money when all I could afford was this four megapixel point-and-shoot! I got it all cleared up by reporting it to the credit card company and filling out some paperwork, but it was still a very scary and annoying ordeal. So ALWAYS make sure you use difficult passwords, log out of your accounts online, and shred all of your receipts and statements. Your office shredder will end up becoming a close friend on your journey through adulthood. (Mine is named Shredward.)
We live, we learn.
I don’t regret much in this life, but sometimes I wish I had walked right past the Visa booth on my college campus that fateful day so many years ago. I seriously applied for a card just to get my hands on a free bag of Skittles and a fucking Slinky! What a STU. At the very least, my money missteps taught me a big lesson about financial responsibility and made me wish that someone had given me the lowdown about credit cards back then. Hopefully my tips will prevent you from making the same mistakes I did. But if you are gonna go wild, I hope you use your fake plastic money to buy something way cooler than a bucket of raver beads. ♦