Are you really ready
for a credit card?
you got a burning desire to join the legions of credit-card-carrying teens?
No doubt about it, credit cards are convenient. But, the
little plastic cards can land you in a heap of heartache and trouble if not properly
for a card, make sure you feel comfortable and confident about some financial
Master the basics
Start by opening a checking account. Master the basic skills of writing
a check and tracking your money.
comfortable using your checking account and can balance a checkbook, apply for
and use a debit card. A debit
card looks and act like a credit card, but is tied to your checking account.
Now you are ready
you have mastered those basics, talk to your parents about applying for a credit
card under your own account at a retail store or bank.
credit cards are another option if your parents are faint-hearted.
sure you understand how the card works, starting with the connection between charging
one month and paying the next. It's not interest-free money unless the balance
is paid in full before the grace period expires. Interest
keeps growing and growing . . .
Talk to your parents
about interest and how it compounds if a debt piles up. Here's a quick example:
If you carry a $500 balance at 17 percent and just pay the minimum amount due
each month, it will take 80 months to pay it off. That's over 6 years, and it
will cost an additional $325.34 in interest. The average minimum payment is 2.5
percent of your balance.
Look at the fine print and
review other key terms such as late fees. Above all, keep the card safe, and know
to do if it's stolen or lost.
Make a copy of the front and back of your card for this
kind of emergency.
Set limits for yourself
Sit down and decide with your parents how much you can spend
and what you can buy (pizza and snacks shouldn't be on the list).
only what you can pay back before the grace period ends. Build up your level of
responsibility slowly. Carefully track your spending so you don't go over your
the best deal
'When you and your parents feel you're ready for a card
in your name, shop around for low rates and fees. Let Bankrate's
credit card search help you find the right card for you.
a good reputation
Pay your bills on time, every
time. This habit pays off with a good credit history. A bad one can thwart your
efforts to buy your first car or apartment. A good reputation will save you lots
of money in interest charges and fees. Here's how
to get a copy of your credit report and understand it.
Take the responsibility for paying all or
part of your balance from an allowance or job. You really appreciate the value
of money when you're standing behind the register pulling in a paycheck.
final tip -- don't sleep through your economics and finance classes!