Are You Ready For Credit Responsibility?
Weather or not you should get a credit card really starts with your financial maturity and discipline. Much of this can be developed along the way, with little missteps easily corrected by paying a fee and changing behavior. A couple days late on a payment? Pay us a fee, we'll put a short term mark on your credit score, but overall not a big deal. Make a habit of it, and it'll get ugly for your credit score quickly and the interest and fees will flair up to boot.Credit Card Perks
The best thing about credit cards are the perks. You can get rewards points, cash back, airfare miles, discounts, and all sorts of things. These perks differ by card and account, but can really add up quickly if the card picked matches the spending you already do. Don't go out of your way to spend money on things for which your card rewards you; instead, carefully choose a card that rewards you for the things you already plan to purchase.Credit cards boost your credit score. Having the same card for a long period of time could lengthen your credit history (especially when your oldest accounts are things like student loans that will "fall off" to a degree when they are paid off). Also, having a monthly utilization of 0%-20% looks great to most of the people checking your credit score.
In looking to buy a house, neither of us had any credit history, good or bad. We obtained a credit card and had our netflix and internet automatically charge to our new credit card. Then, as soon as they posted I paid them with my very next check. This reflected on my account as a consistent small percentage of utilization with no carried balance. Because it was a shared credit card, both of our credit scores jumped quickly, then continued to slowly climb as we added months of "good" credit usage.
Credit Cards Can Get Ugly
It's very important to avoid a credit card if you have trouble spending less than you make. Falling behind on a credit card can be stressful and very costly. Interest rates will bog you down and drastically inflate the amount you spent if you carry a balance from month to month.Long story short: only swipe the card up to an accumulated amount that you know for sure you can pay off by the end of 30 days. Then: pay it off. Don't pay minimums on a credit card bill, either. Literally every 50 cents over the minimum payment will save you interest over the next month or months until you can get the balance to zero.
If you have trouble not swiping that card, leave it at home in a safe space. Cancelling it may shorten the life of your credit history or otherwise negatively affect you. Instead, put it somewhere not on your person so that you cannot easily utilize it, but know that no one else can steal it either. The best suggestion I've heard is a locking filing cabinet, such as where you save your tax information outside of tax season. Make sure when you do this that you continue to pay down the balance until it is zero. Make it a priority to over pay as much as you can without hurting yourself in the short term, but recognize that every dollar over the minimum monthly payment will help you get to zero much, much faster.
Minimum payments often are a reflection of the interest gained so that you don't ever pay off that purchase. Everything over the minimum will help you lower the minimum payment by lowering the principal. For example, a purchase of $50 may yield a $5 minimum payment. Pay $5 and next months bill will also be five dollars. Pay $6, and next months payment will be $4.25. Continue to pay at least the $6, and the balance will be paid off eventually. Paying $6.50 will get you there faster. Every penny counts: I promise.
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