Are you ready for your first credit card? For a lot of folks, starting their adult life translates to starting their own credit history. It can be hard to find cards that match your credit score and financial needs, though financial search engines like Fiona can help. Below, we’ve gathered some tips about how you can start responsibly using credit cards so you can build a stable financial future.
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Open a Card That Helps Build Credit
For a lot of us, the best way to learn is to do. Take out a secured credit card with a small balance so you can start getting the hang of being a responsible credit card holder. Not sure how to be a responsible credit card user? Start with only using it for purchases you are already making, so you know the expenses already fit in your budget. You can also pay back any purchases made before your payment due date.
This gives you a chance to see the money exit your debit account in real time. Sometimes credit card purchases are easily forgotten and left out of a regular budget, which can cause you to run a balance on your card. Then your account may accrue more interest and ultimately cost you more.
Become an Authorized User
Don’t feel quite ready to have your own credit card? Ask your parents or guardians to add you as an authorized user on their accounts. This gives you a chance to use a card with guidance. Think of it as having a learner’s permit—just like having an adult beside you while you learn to drive, it can be helpful to have a guide as you begin your credit history.
Parents unable to add you to their account? Ask your parents if you can make credit card purchases with them, so you understand the mechanics of how credit cards function. Ask them to explain APRs and how they pay off their balance. You could even ask them what they wish they’d known about credit cards at your age—they might just be able to help you avoid some typical missteps.
Check Out Local Credit Unions
Credit unions are a great place to start building credit. Though the balance limits are much lower than larger lending institutions, most credit unions do a great job of providing financial education as well as assistance in choosing accounts that good fits for your circumstances. If you’ve recently enrolled in a college or university, there may be an on-campus credit union that can help you get going. Otherwise, look for a local branch and see how they can help you apply for a starter card.
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Stay On Top of All of Your Bills.
It’s important not to lose the forest for the trees when thinking about credit card debt. Don’t focus so much on maintaining your credit debt that you ignore other bills. Your credit score can be harmed if you have too many late payments or if any accounts fall into default. Part of being a responsible credit card user is being responsible for all of your finances, not just your cards
Don’t Co-Sign Early in Your Financial Life
Now that you’re more independent than you’ve ever been in your life, you might have struggling friends or family ask you for help with their credit by co-signing a loan or credit card. Co-signing as a young credit-holder puts you at risk for someone else’s debt—which is great when they’re holding up their end of the bargain, but an issue when they aren’t. Co-signing is a serious commitment and generally not advised for younger account holders.
The best way to share your credit while being a responsible account holder is to make someone an authorized user on your account. This can usually be done (and later un-done) over the phone or online. While making someone an authorized user offers the ability to use your credit, it doesn’t risk your score and in many ways your financial future the way cosigning does.
Walk, Don’t Run.
Think of credit card usage like a swimming pool. It can be fun to dive in deep, but carelessness like running around on a slippery surface can be dangerous. As long as you know how to swim and are aware of your surroundings, you can have lots of fun while staying safe. Start looking today for a credit card that works for you. Follow the suggestions above to learn how you can responsibly enjoy the rewards of being a credit cardholder—and start your credit card history in a healthy and productive way!