Teen Financial Toolkit – Credit Cards

By Avery Mills | Jul 1, 2019 8:00:00 AM

Artboard 7-1`Teen Financial Toolkit – Credit CardsUsing a credit card is an important part of building of your credit score. This is score is used to determine whether or not you’ll be approved for loans, employment opportunities, and as a renter. Here some tips for teens when it comes to using a credit card.

CO-SIGNER

If you are under 18, you will need to become an authorized user on someone else’s account. This is usually a parent or guardian in most cases. Choosing this route places extra responsibility on your shoulders because your mismanagement of the card will affect the other person’s credit.

PICKING THE RIGHT CARD

The goal of having a credit card in your teenage years should be to build your credit, not to rack up debt. Because of this, you should select a card that features a low interest rate and low fees. This means that you may start out with a card that features little to no benefits and a low initial credit limit. As you become a more responsible user of credit and progress in your career, you’ll be able to upgrade your card down the line.

SMALL PURCHASES

When you first start using a credit card, begin with small purchases that you usually make anyway, such as filling up your gas tank. Once you make these purchases, immediately pay it off. After starting this habit, you can start budgeting to make bigger purchases with your card. Having a plan in place to pay off the balance in full each month will help you save money by not having to pay interest,.

CREDIT SCORE

Once you have a credit card and start using it, your credit score will begin being impacted. If you miss payments or spend more than 30% of your total credit, this may result in your score dropping. While it’s super easy for your score to drop, it’s equally as difficult to bring it back up again. Set reminders when payments are due

Topics: TFT, Teen Financial Toolkit

Author: Avery Mills