Everything else

Not-So-Fantastic Plastic

Mo’ credit, mo’ problems.

Illustration by Dylan

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. ♦

42 Comments

  • isobele July 19th, 2012 7:15 PM

    I love how rookie can vary from articles on glitter to articles on financial independence. You wouldnt get that in any other magazine!

    http://seesusiebean.blogspot.co.uk/

  • missblack July 19th, 2012 7:15 PM

    I LOVE YOU FOR WRITING THIS ARTICLE. I’ve always been a super-worrier and money is one of the things I worry about the most. (This is why I read tons of personal finance blogs and also why I used to watch Shameless obsessively to make me feel better about potentially being poor (among other reasons – I mean, that show is amazing – but mostly because I felt like if they were making it work then I could probably make it work, too).) And credit cards are pretty much one of the most confusing things on planet Earth so this article is vastly helpful.

    -kelsey

    Little&Trivial

    • Marie July 19th, 2012 7:22 PM

      I LOVE ME SOME SHAMELESS!!!!!!!!!

  • rosiesayrelax July 19th, 2012 7:22 PM

    Life lessons with Rookie. I love you guys.

    Escaping Jackie

  • July 19th, 2012 7:28 PM

    This is SUPER helpful, thank you Rookie for being helpful, honest, and just generally awesome
    http://thelunalovingbookworm.tumblr.com/

  • Samantha July 19th, 2012 8:02 PM

    Rookie, as a non-teenage reader who took a long time to figure this business out, I gotta say, this is amazing! I wish someone had explained credit cards so succinctly and simply to me.

    If you’re looking for more help in learning finances, I’d suggest signing up for a class – a lot of places offer them; I took one through my church that has benefited me immensely.

    http://poorgoop.com/

  • connie July 19th, 2012 8:11 PM

    i’m terrified of credit cards, but i need to get one! if i ever want to book a flight, a hotel room, buy stuff online, etc., u jus gotta hav dat card. sigh, dis world…..

  • NotReallyChristian July 19th, 2012 8:12 PM

    Rookies in the UK: you DO NOT need a credit card for a house/flat! Admittedly I don’t have a car, but my brother and I own a flat together and neither of us has a credit card, only debit. It might be different if you have a mortgage, but you can own a house without a credit card. LOVE this article though :)

  • katrinaexplainsitall July 19th, 2012 8:40 PM

    Reeeally super useful article right here. thank you, Marie <3

    http://www.katrinaspice.blogspot.com

  • Katie E July 19th, 2012 9:30 PM

    Wow, I definitely needed to read this right now. I don’t have a credit card, but I’ve got a debit card and my online spending has been getting a out of hand lately.

    • Marie July 20th, 2012 12:56 AM

      Online shopping is the worst kind of temptation because it makes it SO EASY to be impulsive and spend money. RIGHT AT OUR FINGATIPZ…I recently unsubscribed to seriously about 15-20 shopping/deals mailing list to help curb my clicking on those sites.

  • runningfilm July 19th, 2012 9:52 PM

    I just got my first debit card, mostly because I run a photography business and my parents were sick of having to deposit client’s money for me and punching in their card’s numbers so I could buy their prints. I had to be 17 to apply, anyway, so it all worked out (I went to the bank to get it that birthday).

    I’m so thankful to have this information now. I know it’ll be a few years until I dive into the credit world, but I’ll keep this handy until then.

  • Maggot July 19th, 2012 9:57 PM

    This reminds me of that one spongebob episode where Mr. Krabs gives spongebob his credit card to buy a birthday present for pearl and he buys her ALL the shit in the mall.

    Damn, I almost felt grownup for a moment. And then the spongebob reference.

    • Marie July 20th, 2012 12:56 AM

      Spongebob can be very educational!

  • Cerise July 19th, 2012 10:51 PM

    This is wonderful and oh-so-necessary right now. Thank you!

  • azultardis July 19th, 2012 11:44 PM

    I actually took a couple of classes at high school related to finances,and then in colleges again, and every teacher pretty much told us to avoid credit cards and credit cards at stores,and buying things like clothes with a credit card cause it’ll probably be useless before you can finish all the payements

  • Ben July 20th, 2012 12:19 AM

    I just got a debit card 2days ago! I’m kinda worried to use it! Rookie is always so relevant and stuff!!! Money can be scary. I don’t really want to use it but I’m trying to be more independent!

    • Marie July 20th, 2012 12:51 AM

      Just make sure you log all your spending/deductions in a checkbook! If you do that you will be fine. Trust, you do NOT want $30 Overdraft fees!

      • Marie July 20th, 2012 12:51 AM

        er, I mean check register!

    • missmadness July 24th, 2012 10:48 AM

      Also, check to see if your bank offers overdraft protection! My debit pulls from a linked savings account if I ever have to go over my balance (side note: tow trucks are not cheap.)

  • Adrienne July 20th, 2012 1:08 AM

    I got my debit card two years ago… and boy I felt grown up haha! But yeah my Achilles heel is definitely online shopping…. :(

    A good tip is when you’re out and about shopping, use cash to pay for your stuff. That way, you get to see how much you’re spending! But make sure to go to your bank’s ATM or else other ATMs will charge you for a fee.

    http://theaverageasiangirl.blogspot.com

  • kendallakwia July 20th, 2012 1:37 AM

    In one of my classes last year, we were forced to watch a movie called “debt slapped” which was about this topic. It was a terrible movie, but it convinced me to never get a credit card.

  • FlaG July 20th, 2012 2:53 AM

    My mum regularly watches Suze Orman’s show, and she’s learned a lot from it. As a result, so have I. Mum’s biggest takeaways were: NEVER CO-SIGN ANYTHING, always pay your CC bills in full, and keep your savings in a fixed deposit account with the best interest rate (i.e. make your money work for you).

    I absolutely will not pay for anything with a credit card, though. I’ve always found that paying with cash helps me keep a more realistic idea of how much money I have at my disposal (for want of a better word).

  • julalondon July 20th, 2012 3:15 AM

    I got my first credit card a couple of weeks ago. It’s pretty much scaring me a bit, but i need one to book flights on the internet… Your idea with the lessons at school, they are brilliant, WHY DO WE HAVE TO LEARN SHIT LIKE GEOMETRY, seriously NOBODY needs that stuff for life. Money lessons it is..=) Thank you! I’m feeling less scared now.

    • julalondon July 20th, 2012 3:16 AM

      Plus, i forgot to say, Dylan your illustration is amazing!

  • Yani July 20th, 2012 3:43 AM

    credit cards are useless. save.

    they put a ‘float’ on the card so that there is an illusion of money, but the debts soon incurred will snap anyone out of that illusion and create a deep mess that will take years to pay back and a lot of grief.

    if you haven’t already noticed, banks only exist to rob you, and they do this best with fees and charges from mortgage payments and credit cards for those without a home in their name.

    those skittles and a dress might seem important at the time, but not having those with a certain type of ‘power’ (banks>who then use police and the law enforcers to find and charge you/intimidate you and take away your power – this includes your government who would rather bail out the banks than support its people) chase you and drain you of energy, money and your authority, is more important.

    sorry for the long comment, but this is something I feel passionate about.

    just because society tells you a ritual is getting a credit card, it isn’t and you don’t have to.

    a debit card with a mastercard/visa symbol on it is different from a credit card. remember, credit card is when you have credit on the card. that credit is simply there to put you into debt ALONG WITH the illusion that you are doing something ‘necessary’ and ‘good’ by building your ‘credit rating’.

    this is a load of bull*. if you use your credit card to buy a house then have a million mortgages, you will never ever get out of them. no matter how ‘hard’ you work.

    CHANGE SOCIETY, DO NOT BUY INTO THE ILLUSION CREATED BY THOSE WHO POISON YOU AND KEEP THE GOLD

  • streaked lights July 20th, 2012 4:13 AM

    To be honest, I’m terrified of getting a credit card! I’m a huge spender, which is why I’ve only been sticking to debit cards so far. Thanks to this article, that’s probably gonna change. Woohoo!

    anooshadraws.blogspot.com

  • emine July 20th, 2012 6:57 AM

    SHREDWARD HAHAH I LOVE THIS!! THANK YOUU!

  • ocolli July 20th, 2012 8:29 AM

    At the very least, you wrote something on Rookie… I don’t think that is least at all…. I think that is the best… so… good work!

  • wallflower152 July 20th, 2012 10:45 AM

    I am 22 and never had a credit card. I have a debit card and that works just fine. I am really good at saving money so I guess that helps. I refuse to get any student loans/credit cards. That kinda stuff is just a trap for kids who are like oh free money and by the time you graduate college you are in way over your head. I need a new car but I’m just saving as much as possible and when I have enough I’ll pay cash haha. Idk, I’ll probably need a credit card in the future but I’ll only use it when absolutely necessary. My advice is save your money and don’t buy s**t you don’t NEED!

  • juliajuliajuliajulia July 21st, 2012 5:33 PM

    Actually, related to the comment above, can you guys write something about student loans? I was recently informed that I have to pay back a butt-ton of them, and I wish I’d known more before I borrowed…

  • kirsten July 21st, 2012 10:16 PM

    bookmarking this.

  • RXLWK July 22nd, 2012 10:30 AM

    Thank you. I completely agree with the first sentence of this article (and everything following, as well). In fact, I think must have declared a similar statement many times over the 2 years of non-stop calls from creditors and impossible payments resulting in my having to declare personal bankruptcy at age 25. A lot of my purchases were incredibly stupid as well – huge orders of lip balm from Sephora and impulse buy plane tickets. Not to mention how much actual hard-earned cash was wasted paying off debts that had been inflated by interest rates!

    I think the most important thing in all this is one’s own behaviour: I had a student card with a low APR and low interest rate from my bank branch. It was the best card one could hope for and my finances still got effed up because of ME.

    Also, for those who have found themselves in terrible financial straits, you can always turn to the fierce Canadian maven of money, Gail Vaz-Oxlade. Oh my god can you please write about her? SHE IS THE BEST. (See the show ‘Prince$$’)

    • Marie July 23rd, 2012 4:49 PM

      Thanks so much for sharing this. I looked up Gail Vaz-Oxlade. She’s great! Awesome tips!!

  • etoilefille July 22nd, 2012 5:04 PM

    This is so great – I’ve never understood why people have credit cards – I still don’t (why spend money you don’t have?) but now I at least understand what to do if I ever have to get one!

  • tinklebot5000 July 22nd, 2012 9:57 PM

    THANK YOU SO MUCH FOR SHARING YOUR WISDOM!!!

  • Ayla July 24th, 2012 11:37 AM

    I love love love Marie’s articles, I always imagine me on the phone with her while spouting this wisdom like she’s a really cool older sister.
    But then again, I always imagine Tim Gunn being my uncle as well..I have a problem haha

  • osc July 25th, 2012 10:56 AM

    I’m 25 and I’ve had a credit card since around the time I graduated from college. I have two now but I only really use one of them (it has a higher limit and I get reward points for using it). I have never carried a balance on a card – I always pay it off throughout the month. I transfer money from my checking account to my credit card and it as though my purchases just came out of my checking account.

    There are a couple of advantages doing it this way. First, of course, I’m building up a credit history (which may or may not be important). Second, I get reward points (never enough for a flight or something like that, but I have bought books for school, cookware, things like that). Third – and this is more recent – I am able to use the credit card sometimes when I need a little bit longer to pay for something. I’m working at a summer internship while on break from professional school. I have an okay stipend, but paying rent and buying other things (like plane tickets to go to a wedding) is a little hard on my checking account. My credit card is making it possible for me to buy some of these things now and wait a couple more weeks to fully pay the credit card off. I still will be able to take care of it in plenty of time before my bill is actually due and would start accruing interest.

    I thought my approach might be interesting to some of you who are figuring out how this all works. I was not really interested in having a credit card when I was younger, but once I started working full time after college I felt like I had the means to be a responsible credit card user.

  • annadee July 25th, 2012 11:09 AM

    THANK YOU!! I have 2 jobs and a checking account, I turn 18 in 5 months and go to college in a year, and this is the best education on a credit card I’ve gotten so far, despite having asked various adults for one. I <3 Rookie!! :3

  • guiltfreedonut July 31st, 2012 4:31 PM

    AHAHAHA I’m at work reading this (workin hard, obviously) and just laughed really loud at “Shedward” in the quiet office. I want a pet shredder now.

    http://www.guiltfreedonut.com

    • guiltfreedonut July 31st, 2012 4:35 PM

      loudly* shredward*.. whoopsies

  • la fee clochette August 7th, 2012 2:18 PM

    Thanks for this!