Credit Cards

You just turned 18 and you are getting more than birthday cards in the mail.  Credit card companies want your business and are willing to take a chance on you by offering you credit!  But, you've heard about people getting deep into trouble with credit cards.  Should you sign up for one, maybe two?

Credit cards are neither good, nor bad.

Just like a car or the Internet, credit cards are resources that can be extremely helpful or extremely hurtful if misused.  On one hand, a credit card can help you with the important activity of establishing good credit.  On the other hand, many people (not just young people) have found themselves in spirals of debt that can ultimately cause them to pay high penalties, pay much more in interest on a car or a home, and maybe even be passed over for a job.

If you decide that you want to have a credit card, here are a few basic actions that you should take.

Read the fine print.

The terms of your credit card agreement are very important to understand.  When you have questions (we all do), ask someone whom you trust to help you understand what the terms mean.

Shop around.

You don't have to accept the first card that you are offered.  Just like with any purchase, remember you are the consumer and need to find the best product and deal for your needs.

Ask questions.

Ask your parents, your teachers, your friends, your bankers and get on the phone with the credit card companies themselves.  They want to help you use this financial tool in a way that will bring about positive results.

Pay on time.

As with all of your bills, and perhaps moreso with credit cards, paying on time not only satisfies the bill, it helps you to establish a record that will benefit you for the rest of your life.  If you should ever find yourself in a situation where you are not able to pay on time, call your credit card company immediately.  They should be willing to work with you, but at a minimum they will know that you are concerned with your account and will be back on track shortly.

Pay more than the minimum.

Although tempting at times, you should not establish a habit of paying the minimum amount required on your credit card bill.  This is because you will drastically lengthen the amount of time that it takes to pay off your balance, having paid much more in interest along the way.