How to Get a Credit Card and Not Totally Ruin Your Life Forever

If you are over the age of 18 and have not yet applied for your first credit card, this is for you. If you are over the age of 18 and have more credit card debt than you would like to publicly admit, this is less for you, but we should talk about that because honey, I feel you!

If you don’t have a credit card, you’re probably wondering why you even should. After all, they call the young folks today the generation of debt. According to the Federal Reserve Bank, Americans have racked up $1.3 trillion of student loan debt, more than double the amount of debt carried by Americans just eight years ago. That debt is growing at a rate of $3055.19 per second. Wheeee!

We are putting off owning homes, buying cars, and making babies in record numbers, and queer and trans folks are dealing with this in addition to issues like workplace discrimination, barriers to creating and being respected as families and parents, and overall higher rates of economic insecurity.

So here we are and you are thinking, Why are you even bringing up getting a credit card? Isn’t that the worst possible thing I could do?

Here’s the thing, for those of you who are not planning to live off the grid: if you ever plan to own property, get a loan for a car or a piece of furniture or a household appliance, additional school loans or loans for your kids, you need a history of decent credit. Debit cards don’t count towards your credit score. If you have school loans, they do! Additionally, very few of us these days have an actual emergency fund. If you, like me and like most people, don’t have a few thousand dollars sitting in a bank in case you have a medical emergency or your face explodes, a credit card is not a bad thing to have as an emergency-only back-up plan.

But all credit cards are not created equal. Here’s what you want to look for and consider when applying for your first card.

Things a Good Card Must Have

"Am I doing this right? Send help." via Shutterstock

“I got this because KaeLyn said to. Am I doing this right? Send help.” (via Shutterstock)

So maybe you see those fancy black cards or diamond cards or whatnots on commercials and think those are the best bet. Well, they’re very nice, but they are also for the 1% or at the least, people with lots of money who aren’t getting their very first credit card. You want a card that can grow with you. Look for a card with:

  • No annual fee: The more perks a card has, the higher the annual fee. However, you really just need a basic card and you likely can only get a basic card if you have limited credit history. The only time an annual fee card might be a good idea is if you are getting a secured card to help repair a bad credit history (more on secured cards below).
  • Low APR (annual percentage rate): The APR is a fancy term for the numeric representation of your yearly interest rate, which involves math that you really don’t have to know. Just know that a lower APR is better. 23.9% APR is very high. Less that 19.9% APR is ok. Less than 14.9% is very good. Less than 9.9% is great. Less than that is almost impossible in 2015. (I had a 4.9% rate on my first-ever credit card almost 15 years ago, but those days are long gone.) If the card has a special introductory APR rate, also look at the APR after the intro period ends (usually a range of possible APR’s based on your credit-worthiness). Also, look at the penalty APR, which are typically quite high. If you miss a payment, the issuer can bump you up to the penalty APR immediately.
  • 0% introductory APR: If you have a little bit of credit history already and a fair credit score, you may be able to get a card with a 0% introductory APR. This is often a great deal. Again, just be sure that the regular APR rate isn’t extremely high.
  • A fair grace period (typically 30 days): This is the amount of time you have to pay off your balance before you are charged interest. You could theoretically pay your balance in full each month and never pay interest on your purchases. Most credit cards bill monthly, so you have until your next credit card statement to pay off your charges.

Things a Good Card Might Have

"I got a card that will let me earn airline miles so every trip to see my girlfriend brings me closer to...seeing my girlfriend!" (via Shutterstock

“I got a card that will let me earn airline miles so every trip to see my girlfriend brings me closer to…seeing my girlfriend!” (via Shutterstock

  • Rewards Programs: No annual fee cards don’t tend to have massive rewards programs, but you can easily find a card that will give you airline miles, 1%-2% cash back on purchases, discounts at online retailers, statement bonuses, and other rewards perks. If you have a fair credit score, you should be able to get a card that will give you some rewards while you build your credit history.
  • Perks at Your Favorite Store/Airline/Hotel/Capitalist Megastore: If you typically fly the same airline to see your long distance partner or you often stay at the same hotel chain for work or fun or you like to shop on Amazon.com, you can totally get a credit card that will give you extra rewards at those places and even help you earn free flights/nights/stuff with your everyday purchases. Hurrah!
  • Car Rental Insurance: Many cards come with car rental insurance and collision coverage included, if you rent the car with your credit card.
  • Trip Cancellation Insurance: Some cards also cover your cancellation fees if you have to cancel a flight at the last moment.
  • Student Card: Having very little credit history doesn’t mean you’re locked out of getting a decent card if you’re a student. Student cards, offered by most banks, are particularly for younger folks with little to no credit history and a limited amount of income. The spending limits tend to be low, but that’s not necessarily a bad thing. You can also check and see how and when you can upgrade your student card to a regular card when and if you want to.
  • Secured Card: If you already have a poor credit score, getting a credit card can be really challenging… near impossible if you have a messed up credit history. A secured card may be your best option. Generally, a secured card isn’t the best deal because there tends to be an annual fee and the spending limits are very low. How it works, though, is that the card links to a savings account. The savings account is collateral and your account limit will be what is in the savings account. So the bank knows there is cold hard cash available to them if you don’t pay your card. And you get to start building or rebuilding your credit history. Hooray!

Other Things to Consider

YOUR NAME HERE (via Shutterstock)

YOUR NAME HERE (via Shutterstock)

  • Do you want to owe money to a bank? Getting a credit card is possibly one of the most capitalist things you can do. I mean, probably not, but kind of. If getting in bed with a bank makes you feel like you need a scalding hot shower, there are some other options. Look into your local credit union or, if one exists where you are, a co-operative banking institution. These banking institutions are member-owned and can still issue credit cards and handle all your other financial needs. In fact, credit unions sometimes have the best rates on home and auto loans, so if that’s in your future, it’s good to sign up with one now.
  • How will you use your new spending power? Some advocate that you only use your cards in emergencies. Like abstinence-only sex ed, this would be foolproof advice, except it doesn’t work for most people. Also, you will build your good credit faster if you are actually using your cards. Just keep your balances low. Don’t spend more than you are able to pay off quickly (advice that I have learned the hard way and am still paying for). Don’t treat credit cards like a loan (again, advice that would have helped me a decade ago). To build and maintain a good score, you should strive to not use more than 30% of your available credit at any time. But really, pay your bill each month. On-time payments are a must. Some will say to pay your balance in full each month. It’s not the worst advice. But if you want to build your credit score, you should actually carry a small balance from month-to-month, a manageable balance. Like, you would be able to pay it off in full quickly if you had to.
  • How many cards should you get? Slow down, Bessie. Start with one card. Opening more cards in a short period of time can hurt your credit score. Also, this is a new thing, so start slow until you are sure you can handle the responsibility of more credit.
  • Do you know your current credit score? Before you even start applying, check out your credit score and check your goddamn credit report. Your report is a detailed record of all your credit history, which includes info on your trade lines (credit cards, school and car loans, mortgages, that computer you financed at Best Buy), public records (unpaid utility bills, bankruptcy reports, liens, and overdue debt), and credit inquiries (when a bank or lender looks up your credit report). Your score is a numeric representation of your credit worthiness (how much you are to be trusted with money) and a higher score is what will open the door to getting larger loans (like a mortgage) in the future. You can get your report annually from the three major credit bureaus for free. And you should totally check it, even if you don’t care about ever getting a credit card. Because if someone ever steals your identity or hacks your accounts, that might ruin your credit and you want to catch and dispute those charges as soon as possible. You used to have to pay to see your credit score, almost always. However, there are ways now to monitor your score for free. You can use a program like My Bankrate to check your report and score for free, even if you have very little credit history. Many major credit card companies and banks are now offering credit scores to their customers online for free, so check if you have a current bank and/or card with a major carrier.

How to Build a Really Good Credit Score

How your credit score is calculated, right from the horse's mouth aka FICO

How your credit score is calculated, right from the horse’s mouth aka FICO

  • Make payments on time. This is the most important thing, ya’ll.
  • Use 30% or less of your available credit. This is why, after you’ve established a credit history, having multiple cards isn’t necessarily bad. The higher your available credit, the lower your credit usage. Like, if you have a $1000 credit limit on one card, you should try to never use more than $300 (30% available credit), but if you have a $2000 total credit available on two cards, that $300 is only 15% of your total available credit. MATH.
  • Keep your card for a long time, and use it. The longer and more frequently you use your credit, the more your score will ascend to greatness.
  • Think about different types of accounts. Do you just have a million school loans? Or do you also have credit accounts, other loans like mortgages, etc? The harder an account is to get, the more it reflects positively on your score. Mortgage accounts, for example, are a big A+ on your account (as long as you are making your current payments) because they are hard to get — seriously, I know this for a fact.
  • But also, don’t start too many new accounts. The more accounts in voluntary inquiries (what happens when you apply for credit and a lender checks your score with your permission) you have in a period of time, the lower your score. Yet another reason to start with one card when you are just building credit.

The Real Deal

This is my real life. I have 13 revolving credit accounts right now. Wee! But I've learned a lot in the process! (via Shutterstock)

This is my real life. I have 13 revolving credit accounts right now. Wee! But I’ve learned a lot in the process! (via Shutterstock)

You may be reading this and thinking, “Yes! I am so prepared now to get my first card or a new card! This is very good information!” I hope that is what you are thinking. You may also be reading this and thinking, “It’s too late for me. I’ve already made all the bad choices. This is making me have a panic attack.” Well, if you are in the latter group, I’m just going to put out there that I’m there, too!

I learned all this good stuff about credit after I’d already racked up considerable credit card debt. Plus, I was underemployed for a period of time after college and made the poor choice of relying a little too much on my credit cards. My spouse and I are still working on paying off our many debts and will be for decades. However, we are doing OK. We have still managed to buy a house and plan a bit for the future, even. I’ll never be rich and it’s hard to imagine ever being 100% debt free, but I know I’ll get closer to that in time. Over the past decade, I’ve watched my score go from the 500s (pretty low and sad) to the mid-700s (very respectable) due to paying on time, learning a lot about how credit works, and monitoring my credit score and reports. Perhaps paying off existing cards and fixing debt is another article for another time, but I just want you all to know that, despite having all this knowledge about credit cards, I did not follow my own advice. And I’m still going to be fine.

We don’t talk about money enough because it’s uncomfortable and social norms say it’s rude. But damn, our generations have really been hit hard by the economy. And our community is especially vulnerable. We have to talk about it to help each other survive it! If you have experience with credit cards or other tips you want to share, post them in the comments! Let’s learn and thrive together!


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Profile gravatar of KaeLyn

KaeLyn is a 34-year-old (femme)nist activist and the reigning Queer Fat Korean Immigrant Ms. America Pageant winner. You can typically find her binge-watching TV, over-caffeinating herself, standing somewhere with a mic or a sign in her hand, eating tofu, or just generally doing too many things at once. She lives in Rochester, NY with her spouse, a baby T. rex, a xenophobic cat, and a rascally rabbit. Talk sexy about intersectionality, cult movies, or theatre nerdiness to her at @kaelynrich.

KaeLyn has written 143 articles for us.

176 Comments

  1. 0

    This is some great advice! I had to learn a lot of these things through trial and error, and it always helps to hear about other people’s experiences when it comes to managing credit and debt. The taboos around discussing money make it extra hard for those of us who struggle with our finances and have lots of debt.

    • 0

      SO TRUE. That’s why I didn’t want to make it seem like I have it all under control. I mean, I kind of do in that I’ve learned to live with and manage my debt, but I’ve gotta’ be honest about where I’m really at vs. the ideal situation.

      I hate reading finance articles where the person is like, “And I have no debt because I’m a perfect human being!” and it’s just discouraging if you aren’t there yet.

  2. 0

    If (like me) you are a slave to Amazon shopping, a good card to get is the Amazon Rewards Visa. It gives 3% back on Amazon purchases, along with 2% gas/restaurants and 1% all else. This is given in the form of Amazon credit.

  3. 0

    This is awesomesauce Kaelyn! I know so many people that have fallen into debt-holes, and it’s SO easy to do.

    A bit of advice I was given (re- spending): figure out which gives you the fear (cash/card) and then use that for your purchases. I feel more like I’m spending if I take money out and use the physical cash, whereas for some people it’s the opposite. By using the one that makes you most wary you’ll (hopefully) keep spending in check.

    And something I learned about myself: never have a credit card/overdraft that is bigger than your monthly incomings. I once had an overdraft that was basically my monthly paycheck and I kept dipping into it, and then a little more, and so on until I basically lived in it and each paycheck would just cancel it out. Fortunately I changed and got out of that shit. DON’T BE LIKE ME KIDS.

  4. 0

    That ‘length of credit history’ thing is real. I’ve known people who avoided credit entirely and then found out at 30 with a high paying tech job that nobody would give them a home loan. You really do want to have a credit card. And pay it off every month.

    When I transitioned and changed my name, in one of the thousand paper cuts of transition, my credit score tanked. I couldn’t get new cards for some time in my proper name because I didn’t have an established credit history, and it’ll take many years for it to fully recover. It’s okay enough for loans now, but partly because I kept asking for cards until Capital One said yes and then time takes care of the rest. (And good financial management.)

    • 0

      That really sucks about your credit score tanking. I’ve heard that’s an issue for people when they change their name and gender marker. Thanks for sharing it here. It’s something people should know might happen to them.

      Here’s to many more years of good credit. I know you’ll get back on top of it eventually! You obviously have the financial savvy. Now just the time….

  5. 0

    You can totally disregard APR as a consideration if you’re not in debt and are going to pay off your card in time, like say maybe with automatic payments from your checking account. It doesn’t matter if a card has an obnoxious APR or a great introductory rate if you never carry a balance for it to be applied to.

    • 0

      Good point! I actually would recommend carrying a small balance to build your credit faster, if you have the strength of will to be able to do that without overspending. But if you’re definitely going to pay in full each month, the APR is less important.

    • 0

      More cards isn’t necessarily bad! It can actually improve your score, as long as you’re still owing less than 30% of your total available credit. It shows you are more credit-worthy if you have more cards. It can work against you if you open multiple lines of credit in a short period of time. But if you just got a new card and have been using your other one for a long-ish period of time (more than a year), it may actually improve your score! Yay!

  6. 0

    I needed this so much right now, it’s incredible. My parents taught me nothing about credit cards and I’m realizing that I probably should’ve gotten a card several years ago as I have absolutely no credit. I’m in the middle of a horrible housing search and this was just so wonderfully soothing to see, like at least Autostraddle is still looking out for me!

  7. 0

    Getting a student card is a great idea. And technically you don’t have to be a student to get one, if you know to ask the right questions. I never had a credit card in college because I didn’t have a steady income. About a month after I graduated I asked if I was still eligible for a student card and it wasn’t too difficult for the bank to issue it. For me that was probably the best way to get a credit card, the spending limit is low but very manageable for a recent grad with a low paying job. And if you keep paying everything on time than that limit will eventually go up which is perfect for when you transition to a better paying job (hopefully).

  8. 0

    Thank you so much for this!! I’m pushing my way through grad school slow but sure and currently live at home but waiting for the day I can move out and rent my own place. And I know I need a credit score to apply to rent so I’ve had that “you should get a credit card” nagging in the back of my head for while not actually knowing anything about how to do it. This was exactly the right amount of information in an approachable and non-threatening way. Autostraddle always has my back

    • 0

      You don’t necessarily need a credit score to rent, but some places will check your credit. I’d start by looking up your current credit report and score. It may be you’re in a better place than you think you are!

      Good luck getting your first card!

  9. 0

    I’m pretty sure it’s a myth that carrying a balance helps your credit score. The problem comes when people pay the charges off so quickly that they never get billed for them, so a balance never gets reported to the credit bureaus, and then it looks like the account isn’t being used. But actually I’m not sure if that is even a problem anymore?

    Nobody should ever be voluntarily paying interest on their credit cards, you’re just giving the bank free money for no reason. They’re already getting money from the merchant every time you use your card, you don’t need to give them donations on top of that.

    Having a high balance on the day in which your card is billed can hurt your credit score, but having no balance at all can make it look like the account isn’t being used. So if your balance is really high, pay most of it off before the billing date, but leave a small balance. But ALWAYS pay off the bill in full before the due date, otherwise you will be charged interest.

    • 0

      You’re right! I didn’t lay it all out as to why, but that’s the premise. If you pay off your balance before your next bill, it looks as though you aren’t using your card to the credit bureau. Which isn’t the worst thing, but it looks better if you are using your card.

      So as long as you have a grace period after your billing date, pay it by the due date. Avoiding interest is always a good thing. I think maybe I wasn’t clear enough in the article about what I meant, so I’m glad you posted this here.

    • 0

      I am working on paying off debt, too. It sucks.

      You may have already considered this, but if you can not close the cards, it may actually be better for your credit score. THAT IS, if you can keep yourself from using them if they are still open. Because closing cards reduces your available credit.

      Good luck! I’m with ya’! It takes time and patience, for sure!

  10. 0

    I think the best advice I got in terms of having a credit card was to never buy something on a credit card that I would not buy with cash at that exact moment. It has always helped me keep my purchases reasonable, and kept me out of the trap that easy to fall into with credit cards where you overextend yourself because the credit limit is there and you’ve got “time” to pay it off.

    Great article!

  11. 0

    I was just thinking about how I need to start building credit!! But also, I currently do not have a “real job”. I am nannying and babysitting this summer, but making enough money that I know I could pay off small amounts each month. Should I wait until I get a job (will they even give me a card without a job?), or could I get a credit card now?

    • 0

      If you don’t have any reportable income, it will likely be harder (but not impossible) to get a first card on your own. If you find that you are being turned down when you apply, you have options. If you have a parent or guardian or partner with decent credit, they could co-sign for you. Or you could try to get a student card or secured card.

  12. 0

    Building your credit score – I think, and I may be wrong, having activity on the card is more helpful than having a balance. So what you can do is use your cc to autopay something that is the same amount every month (e.g., phone bill) then autopay your cc with that amount. And I think if you schedule your payment to your cc after the billing cycle but before the due date, it will be reported as activity.

  13. 0

    I’m a dork who loves reading about finance stuff, so thank you so much for posting this. It’s also interesting to read about the differences between different countries (I’m in the UK).

    I felt like such a grown-up when I first got my credit card, and on the occasions when I’ve needed more money than I actually had at the time (car issues, moving house), it’s been super helpful for that. I don’t know if it’s a thing in the US, but you do get more protection making purchases with credit cards than with debit cards over here. So when my GF and I booked our holiday, we put it all on my card then paid it off the next month, so that if something were to go wrong, we should have a bit more of a safety net.

  14. 0

    YNAB (You Need A Budget) has suuuper been helping me. It takes a little bit of a brain shift to get going (I definitely recommend the classes, and there are a lot of helpful threads on Reddit), but I’m a month into it now and I’m finally spending way less than usual. I used Mint.com for a while, but while that was helpful in figuring how much I could spend each month, it didn’t help me know how much I could spend right this very second.

    It’s really helped me on not overdrawing my account. At first I felt like it was really inconvenient that YNAB doesn’t automatically download your purchase history, and that you have to input it manually, but after a few days of using it I realized that being forced to do manual input means that you are thinking way more every time you spend your money, and that you don’t spend more money than you’ll actually have in the bank once all of your transactions clear (my Target debit card takes like a week to clear, for example). YNAB is definitely one of those apps that you have to like futzing with your money and with numbers to enjoy using, but I find that all the futzing makes it much easier to curb my impulse buying.

    Another app/site I’d recommend is Credit Karma (it’s free and does not affect your credit score, and it updates your score monthly). My girlfriend has never had a credit card, has a huge amount of student loan debt, and a few defaulted medical debts. She started a new business this year (she’s a mechanic and handywoman), and she’d like to be able to get a credit card for work stuff. Credit Karma helped us figure out what problems she had on her credit score so that we could start fixing them. It also helped her feel a little bit better, because although she has a bad credit score, she’s never missed a payment on any of her loans (which will help when we get the defaulted debts paid off).

    I cannot recommend Discover credit card and Discover Bank highly enough. The Discover card is great (it meets all the requirements, and you can use the reward money you earn directly on Amazon or as a payment on the credit card), but where Discover really shines is through their bank. You may have to be a Discover credit card customer to get access to Discover bank? I have two checking accounts and a savings account with them, and they definitely offer the best rewards I’ve ever seen for a debit account. I earn about $2.50 on each of my checking accounts every month because they give you $.10 for every transaction, and the basic savings account earns as well as most money market accounts with none of the penalties or fees that come with using a money market account (which you usually have to put money into, then never touch it). It’s a minimum of $500 to start it, but then there is no minimum that you have to keep in it which is important to me. They also have IRA accounts, CDs, money market accounts, etc, depending on your needs.

    Make your money work for you!!!!!!!! Yay

  15. 0

    I have a Chase Visa with the rewards points and use it as a debit card (frequently, but not spending money I don’t actually have in my checking account/earmarked as these funds.)

    I have financed several Christmases with Amazon gift cards from those points.

  16. 0

    I know I should have a credit card by now, but I’m reluctant to wade into credit-land. I’m a UK citizen but live in Spain at the moment – and to be honest, I’m not sure I feel comfortable navigating credit in a country where I don’t really understand the rules (and my Spanish, though passable, might not be good enough if I run into financial trouble). Admittedly, I barely understand how credit even works in the UK… I wish we’d learnt this stuff in PSHE (Personal, Social and Health Ed, for you non-Brits) at school instead of watching endless videos about how we shouldn’t start smoking.

    • 0

      I learned how to use a sewing machine and how to write to companies to request coupons in Life Skills (I’m assuming the US equivalent of PSHE). Super helpful to my liiiiiiife. Seriously, though, why is financial literacy not covered in school?

    • 0

      Perhaps find someone local who can explain it to you? I know here in Germany the Debit/Credit card situation is completely different to other places I’ve lived, such as the UK and Australia which are more similar to the US.

      In Germany I have a monthly limit on my card and what I spend one month is ALL debited from my account the following month. There is a small yearly fee of 20 euros but no interest. That is pretty standard here. I have it because visa debit and master card debit cards aren’t really a thing here and so I need it to shop online and internationally as I can’t do that with my normal bank card.

      Who knows what kind of financial products are offered in Spain?!

      • 0

        Yeah, I have no idea how it works outside the U.S.A., unfortunately. However, if it’s like it is here, you could probably just go to a trusted bank or credit union and ask to speak with someone about credit cards. Most banks will tell you about their products for free. Just go in knowing if you plan to get a card or not–don’t get talked into it just because you’re there.

      • 0

        It’s the same in Italy too (the yearly fee depends on the bank & the type of the cc). I think, but I’m not 100% sure, that is the standard situation in most European countries.

        Credit history is important in Germany, even for renting houses, but it’s evaluated differently than in the U.S.

        First time commenter, and not very helpful, uh. Sorry!

  17. 0

    This is such a great article.

    Something that I use to make my credit card charges more real to me, and less like imaginary monopoly money, is to use mint.com and check it every stupid day. I can see my chipotle charges adding up as I go, so it seems like real money I have already spent. Definitely helps keep me on track. Also mint gives you your credit score 3 – 4 times a year, all for free.

  18. 0

    I think it’s important to know that student loans can bring your credit score down. I know people who are paying off some of the student loans of their children off and now their score has gone down(it’s not cheap to go to a private Uni like USC). I’m sure it be the same for those paying off their own student loans.

  19. 0

    Oh my goodness, my best friend and I were talking about this Tuesday night on skype! I have a credit history and effed it up when I lost my job and wasn’t able to pay bills, but I’ve built it back up into a ‘good’ zone. She’s never had a card because she’s nervous. Obviously I sent her this article.

  20. 0

    If you’re not able to get a “good” APR initially, it’s worth checking back with your credit card company after a year or more of consistent, on-time payments to see whether you can get it lowered. Having a card for a long time also helps. I was able to negotiate a reduction in APR on one of my credit cards down to 11.24% just by checking if it was possible. The customer service rep was going to give me a rate that was slightly higher (but lower than before), but I told them that another credit card company was giving me a more competitive rate, so this pushed them to give me that lower rate.

  21. 0

    Oh my word thank you so much for this article! I am moving away from home super soon and have been toying with the idea of getting a credit card but the whole thing just really confused me. I wouldn’t say I totally get credit cards now but I feel a lot happier about getting one! Thank you

  22. 0

    This is fantastic advice!!! It’s so true that ironically in an economy that’s hit us really hard there is still a lack of financial education that could really help in the long run, especially for students that have to take on so much in loans and are barely given solid advice on how to manage so much debt while still having a great credit score, and knowing that even with the debt you can still be okay if you learn how to balance and work your money right. It’s great to have come across this article and shall definitely be employing this knowledge very soon. Thank you so much Kaelyn!!! 😀

    • 0

      Seriously. I wish I hadn’t learned through trial and error, but no one really teaches you about this in high school or even college, unless you are an accounting major. Even then, it can be easy to mess up when you have the weight of student loan debt crushing you before you even get your first job…

  23. 0

    i got my first credit card last year when i was between jobs and needed something quick for daily expenses until i got my next paycheck. i read articles like this before choosing one, and despite doing my homework and believing i could handle a moderate amount of credit, i blew through it all not only on essentials but luxuries – new doc martens, takeout at our favorite expensive restaurant a few times a week, some new kitchen gadgets. about six months laters i’m still paying it and will be for a while.

    • 0

      Yeeaaaaaah. That is really real and I’ve been there. Heck. I still sometimes make a big purchase on my cards when I’m planning a vacation or buying a new large appliance. It’s under control, for me, but I’ll definitely be paying on my cards for a long time. Have you figured out how to stop spending? For me, it means not carrying my cards on me unless I know I am planning ahead to use them. I lock them away, otherwise, so the temptation just isn’t there.

  24. 0

    This is such a good article and I wish I had read it before I got my first (and only until it’s 100% paid off) credit card from Ann Taylor Loft because the sales person was all, “oh, you’ll totally get approved!” and I was all, “I DO really want those shoes…” being an adult is so hard. Thanks for making it a little easier Kaelyn!

  25. 0

    Whaaaaaaaat if I haven’t paid my student loans in, oh, 200-300 days? Should I get a credit card to pay these past months off? And let’s just say my current income is maybe four hundred dollars a month which covers rent and food. am I drowning? I had a credit card years ago but lost it and they wouldn’t send me a new one. Am I dying? Help.

    • 0

      First question, how’s your loan situation? Did you default or are you in forbearance? If you are in forbearance, then no worries. Don’t worry too much about a credit card. If you get one now, I’d say don’t use it and just keep it as an emergency fund. Lock it away. You can still start getting good credit points by having a credit card because length of credit history is a factor.

      If you defaulted (aka just didn’t pay them), stop what you are doing right now and call your loan company and explain your situation and nicely beg for forbearance. They don’t have to grant you forbearance, but they might if you explain your economic hardship. This would mean interest would still accrue on your loans, but you don’t have to pay anything for a period of time determined by the loan servicer. OK, so if they won’t do that, ask to come up with some sort of lower payment plan (even $25/month) until you can pay the full amount. Defaulting on your loans isn’t the end of the world, but it can mess up your credit and result in wage garnishment. So it’s better to talk to the loan servicer and work it out. It’ll give you a lot more peace of mind, too!

      Good luck! You’re not going to die!

    • 0

      Yes, basic personal finance courses should be a required class in high school. I was lucky that my school required all 8th graders to take a super basic personal finance class that covered checking accounts, balancing your check book, how to write a check, and interest, but in hindsight I wish there had been something more advanced in high school.

      • 0

        Agreed! I learned how to balance a checkbook, but that’s about it. I was lucky my parents co-signed on a set-limit credit card for me when I was 18 and tried to give me advice about using it only for emergencies. But I didn’t really understand how credit worked until I was older and in-debt.

  26. 0

    I had a Visa Debit card, (which is standard in Australia & UK), from when I was 14 or 15 which allowed me the freedom of a credit card in terms of online purchases etc while only using my own money. I then got an actual credit card when I was 19 or 20 and got some good advice from my housemate about keeping the cashflow going… but still got into a bit of a mess (mostly shopping…) . Paid that all off, but since then a failed small business has me back in debt.

    My number one tip: If you try and start your own business don’t cover cashflow difficulties with a personal credit card – get a small business loan!!! I totally thought it was ‘just for a couple of months’ until I moved some stock… and 2 years later the business has all but folded and a huge chunk of my salary is paying it back!

  27. 0

    I’m so afraid of debt and credit and getting a credit card that even just reading the title of this article on the main page made my stomach feel weird. Having absolutely no knowledge of how credit works, I knew that I had to read it, so I did…… and I feel a little better! Things seem to make… more sense now……. money…. how do we money? Who puts the? Money for. And we all just. Debt is? How do we die?

  28. 0

    Not to be repetitive of other comments– but Riese told us to leave lots of comments even if they just say “I like this”– so– This is exactly what I needed. I would love an ongoing personal finance for beginners column or something. Thanks!!!!!

  29. 0

    This is really excellent advice. My friends and I have often has conversations about how high school needs to have a “life skills” class which teaches you about things like credit cards, home loans, tax etc. It’s hard to figure out this stuff yourself, which you’re expected to, because you’re not supposed to talk about money. Life is really stupid sometimes.

    It’s like, don’t judge me for my somewhat poor financial choices when there has literally been no education, and society has taught me that talking about money is rude.

    I’m in the process of paying off my largeish credit card and it sucks. My advice would be to know your limit, and don’t accept the bigger limit that the bank will try to offer you. My credit card was supposed to be for emergencies, then I went back to university and suddenly it became “money” when I wasn’t working, or when I hadn’t earned a lot that fortnight. Doing this went against everything I knew, but the temptation was just too great.

    Once I’ve paid off my card, I will keep my card, but I’m going to slash its limit by at least 50%, if not more.

    • 0

      I feel you so hard. I wish someone had given me really good advice (other than just “don’t get into debt”) before I racked up credit card debt. On the other hand, I’m not sure what I would do differently this time around because I graduated college into the recession, so…….

    • 0

      Yesss, my friends and I talk about this all the time! We wish there had been a class of life skills that covered:

      – Actual helpful sex ed including protection, consent, queer specific topics, relationships, asexuality

      – Money stuff like credit cards, bank accounts, tax returns, loans, mortgages, interest, welfare

      – Health stuff like Medicare, health insurance, concession cards, booking doctor and specialist appointments, what to expect on check ups (especially sexual health related stuff), giving blood, first aid, hospitals, mental health

      – Independence stuff like shared accommodation, getting your own place, driving, license, travel, personal safety, booking flights

      – Legal stuff like rights, responsibilities, family law, work place health and safety

      JUST SO MUCH STUFF THAT WE COULD HAVE BEEN DOING EVERY WEEK INSTEAD OF 90 MINUTES A WEEK FOR TWO YEARS DEDICATED TO PREPARING FOR A SPECIFIC TEST ARGGGG

  30. 0

    If I could do things over, I would never have signed up for a credit card. I signed up for a student visa for some scholarship contest in university… that’s how they get you, when you’re young. It has taken me years to pay the darn thing off and the fees are enormous!! Credit cards suck! Don’t do it!!!

        • 0

          It’s a personal decision. I don’t think you definitely should or definitely should not get a credit card and/or participate in the capitalist banking system designed to make us all dependent on banks forever.

          I just think you should know as much info as possible…and not be scared to make financial decisions because of misinformation or pressure. Ya’ know? 🙂

    • 0

      I agree to proceed with caution and look out for people trying to push you into a special promotion. But I’m glad I have a good credit history, overall. I wouldn’t have been able to get a mortgage or a car loan or go back to grad school without a long and stable credit history..

    • 0

      You can always get a secured card or a card with a low credit limit if you’re concerned about going into debt. There are ways to start building credit that are very low risk. If you choose not to get a credit card, that’s a valid personal decision, but you will be limiting your ability to get a morgage, be approved for loans, or have money on hand for an emergency.

  31. 0

    OMG thank you so much for writing this!

    I’ve put off getting a credit card for so long, and it’s been mostly because I’ve had like zero understanding of all the abbreviations and percentages and knowing that I’d probably get lied to into getting ripped off if I didn’t know totally what I was getting into so this is really helpful.

    Also, bless my parents but their only advice any time I’ve asked for it is simply “don’t get a credit card” (literally, that’s the only thing they’ve ever told me about credit). Alas, I’m going to need one to do anything I’m going to want to do in the future and I’m terrified of using money I don’t have so I think I could probably avoid debt.

    • 0

      My parents actually gave me great advice and told me to only put small purchases on my card. I just…didn’t really plan ahead for being underemployed after college graduation. I probably could have avoided this debt by moving home for a bit, but it wasn’t really an option for me at the time…so you live and learn!

      Aaaaaaanyway, sounds like you are pretty responsible and ready to get your first credit card! Goddess-speed!

      • 0

        Thank you! On the plus side they definitely instilled the fear of credit/debt into me so hopefully that will work in my favor.

        My only thing is that I don’t make a lot of money (read: very little money) but I do get a steady paycheck. I’m mostly worried about applying for a card only to get turned down and to have that show negatively on my credit history. Though after looking it up, I think I’m leaning towards a student card since it seems like they’re a bit more forgiving for the poor people just starting out haha.

  32. 0

    The other point is to ask your bank to raise your limit periodically when you have reliably paid it. Totally had to call my bank to raise it to buy an international plane ticket one time and they called me back saying “oh, yes, of course, we should have done that years ago.” You can just get a higher limit on one card rather than having multiple cards if you want to change your ratio. I now keep two: one for serious emergencies, and one for routine purchases.

    I’m of the avoid carrying balances camp– I figure I’m paying enough interest on student loans. I’m not much of a shopper so beyond splurging on the olive bar, overspending is generally not an issue. Debit cards made me nervous, and it’s wicked easy to challenge charges made in error or by badly behaving people on a credit card (debit cards used to have worse consumer protection, and had a couple friends who had their accounts cleaned out when their info was stolen. huge hassle). If you ever have to, the instructions are in the small print on the back of the statement, usually, and you don’t have to pay them while they are being disputed.

    • 0

      Yes, credit cards generally are way better to deal with than debit cards when it comes to fraudulent charges. I would love to get to the point where I was using my card as my primary payment and paying off the balance each month. I’m not quite ready for that yet, but I’m glad to hear it is working for you!

      Thanks for the tip about getting your credit limit increased! Some banks do it automatically and some don’t, but you can ask for an increase (or a decrease, if you feel you need LESS spending power) anytime!

  33. 0

    I am trying to be better and comment more on posts that I really, genuinely appreciate, but would normally just share with friends or on social media, so ….

    I really, genuinely appreciate this, Kaelyn. 🙂 I’ll definitely be bookmarking this for reference and trying to get my debt down to 30% of my credit limit!

  34. 0

    It’s a shame that your systems in America seem to be set up to deliberately encourage people into (bad) debt.

    I put myself into credit card debt in my twenties and it nearly took another twenty years for me to pay it back (due to astronomical interest and penalty fees). Now that I’m debt free, I’ve cancelled all my cards… even store cards. I didn’t care that doing so might put a black mark on my credit report. Who cares? There’s a reason why they practically beg you to keep the cards open “for a rainy day”.

    That’s how they get you….

    My attitude now towards offers of credit (or an overdraft), is that it is not my money. It was never my money, so why would I want it and why would I spend it?

    I now have a debit card (with a credit card function) so that I can make purchases online – but the money comes out of my savings (or cheque account). I’m forced to save real money in order to buy nice things. 🙂

    I feel if everyone just revolted against credit card debt, banks can hardly deny mortgages to the masses.

    • 0

      I hear ya’. I wasn’t joking when I said it is kind of the most capitalist things you can do. On the other hand, I’m never going to be able to save enough money to buy a house outright in cash, so…it is what it is. Good for you for opting out.

      But yeah, even more reason I hope folks know what they’re getting into as they make these decisions. 🙂

  35. 0

    Augghhh I wrote a LONG comment and the interned swallowed it. Can’t make myself to write a similar one, so in short: Loved this article. Need more writing about personal finance that is not written by cis, white, straight, upple-middle-class dudes with degrees in IT. You should still save for an emergency fund insead of using a credit card in an emergency, because interest.

    • 0

      I totally agree about the emergency fund. I have never been successful in having an emergency fund of any substance, though. We put away a little each week into an untouchable savings account that is only for emergencies or big unexpected expenses, but every time we get close to having a decent amount…we need the money and we’re back to square one. :/ The thing is, if we weren’t in credit card and student loan debt already, it would be a lot easier. But when I get a lump sum of cash, like my tax return, I put it towards my credit cards because interest. :/

  36. 0

    If you get a credit card, make sure to use it at least once every year or two. Not only because you can only build credit by using it, but inactive cards can actually HURT your credit score.

    • 0

      Agreed it will help your score to keep your accounts active. But even if you don’t, it’s not a huge risk. A credit card company may stop reporting to the credit bureau on an inactive card after a long period or they may cancel your card. Obviously the benefit of keeping the card open is to have a higher available balance, so if they cancel it, you could lose some points on your credit score. But otherwise, it’s not the worst idea to keep them open even if you aren’t using them. Your purchasing activity counts less than on-time payments and your balance-to-available ratio. But you are right that the more on-time payments you have, the more your score will creep up, so making small purchases that will be paid in full in the next billing cycle isn’t a bad idea at all.

  37. 0

    Great article! I’ve had a student credit card for, like, 7 years, from when I first started university. The credit limit is quite low but they won’t let me increase it until I stop being a student, alas. I was wondering if anyone could direct me to some additional articles/information about why you shouldn’t spend more than 30% of your credit limit? This is something I’ve never heard of before.

    Also, regarding keeping a balance on your card so there’s activity on it: I usually log into my online banking once a week or so and pay off whatever credit card balance is in there. Is it better to wait until the bill is actually due? I’m just really concerned about accidentally missing the payment deadline and making a late payment.

    Finally, does anyone know of any good Canadian websites where one could check one’s credit score?

    • 0

      You don’t have to wait until your bill is actually due. You are right in thinking that you could accidentally miss a payment if you do that! So try not to do that.

      The way a credit card works:

      1. You make charges during a certain monthly period (which doesn’t necessarily correspond to the actual month, it’s just a period that is a month long).

      2. At the end of this period your credit card company sends you a statement (a bill) for the current balance. Whatever your current balance is at that time also gets reported to the credit bureaus.

      3. You have a certain amount of time to pay that bill, like maybe 20 days or so. If you haven’t paid the credit card company for all of the charges that are on that bill by the due date, you are charged interest on that bill.

      Note that you only need to pay for the charges that are on that bill.

      So let’s say that your billing date is usually on approximately the 10th of every month, and your due date is approximately the 30th of every month (your actually dates could be vastly different from this, and could change from month to month. You need to check!). So on July 10th you will be sent a bill for all of the charges you haven’t yet paid for on that day. Say your bill is $100. At some point before the due date on July 30th, you have to pay $100. You’re probably making more charges, on July 12th, and July 20th, and July 25th, etc. But you don’t have to pay those charges yet. All you have to do to avoid interest is pay the $100 bill before the 30th. And you do! Congratulations. On August 10th you will be billed for all of the charges you made between July 10th and August 10th, and then you will have to pay for those charges by August 30th. And on and on.

      Now, if for some reason you don’t pay one of these bills in full by the due date, you will be charged a ton of interest. Way more than you’ll ever expect probably. So NEVER DO THAT. Unless you have to because of an emergency, and the alternative is worse than debt. Maybe the alternative is even worse financially, like losing your job. Or the alternative is not going to the doctor and dying, which would suck! So in an emergency a credit card can be a good thing to have, because it helps you avoid something that is even worse than credit card debt.

      ——

      How this affects your credit score: The credit bureaus don’t see the charges you make, they only know what your balance is on the billing date. If your balance is zero, it looks like you aren’t using your cards. If your balance is a substantial percentage of your credit limit, it looks like you might be using your card irresponsibly. Even if these things aren’t true! The credit bureaus have no way of knowing if they are true or not, they just do the best that they can with the limited data they are given. They take a limited data set and run it through an algorithm to guess how good of an investment you would be to a creditor.

      So you can use your card a ton, make the credit card company a bunch of money on merchant fees, and pay off the entire balance the day before your billing date, and it will hurt your credit score because it looks like you aren’t using your card. Or you can make an extremely large purchase that maxes out your card the day before your billing date, pay it off in full two days later, and that will hurt your credit score even though you paid the balance off before anyone could blink, just not before the bill was sent. These changes to your credit score will probably be minor and short lived though, unless you do this same thing month after month.

      Another thing to keep in mind, that seems to be the source of a lot of confusion people have about how credit scores work, is that all a credit score is intended to do is guess how good of an investment you would be to a creditor right now. It’s not intended to measure how financially responsible you are. To some extent it is (intended to be) based on how financially responsible you are, but just because you used to be able to pay your debts in the past doesn’t mean you would be able to today. That is why doing something like paying off a loan could lower your credit score. Someone who has debt right now that they are actively managing can look better than someone who used to have debt and managed it well, because maybe that person is no longer in a position where they can pay their debts.

      I don’t know why I wrote all this!

  38. 0

    I had no idea I had bargaining power over my interest rate, thanks for the tip! I like my bank and want to stay with them but I’ve had this card for about 2 years and I’m paying about 17-18%. I’m carrying a small balance (about 15% of my limit), so I was considering a balance transfer. Going in to ask for a rate adjustment sounds better for everyone. Thanks again!

  39. 0

    I have sort of poor credit because of a hospital bill my parent said he paid for me in college…but didn’t. And that’s all I’ve got right now. I’ve been wanting to get a credit card to start to build my own credit. Thanks so much for this article!

  40. 0

    Awesome to see Autostraddle finance articles but would be cool to see other perspectives regarding credit cards. My wife and I have been living on a budget for 2.5 years and after some major sacrifices we have finally paid off our student loans, credit cards, and car loans. In my opinion credit cards are a bad idea no matter what. Now that we are debt-free from credit cards and monthly payments I will never go back to using credit cards because they did not help us get ahead but rather caused us unnecessary stress. I know how hard it can be without credit especially in our society where everyone seems to have a credit card. My advice would be to save a little $500-$1000 emergency fund so you are not relying on debt when emergencies happen. Pay with a debit card so you are using money you actually have in the bank. Sorry if this comment came off preachy I just feel like life is much better without credit cards.

    • 0

      WOW. 2.5 years and you’re out of debt. That is amazing!!! Unfortunately, I’ll probably have debt for quite a long time. I applaud you!

      I do not use credit cards regularly anymore and I would not want to reestablish the habit, either. I use a debit card for everyday purchases and bills. I don’t trust myself to pay my bill in full each month. I hate the commercials where they are like, “No. I’ll pay for it because of my awesome rewards points!” because that is a horrible way to use a card unless you’re actually paying your bill in full each month and not overspending.

      However, I’m genuinely grateful that we had enough credit history and good credit scores between us so that we could get a mortgage three years ago. And I do think it is good to build positive credit history unless you are planning to buy stuff in cash for your whole life.

      Aaaaanyway, I appreciate your perspective and fundamentally, I think we are in agreement on how to use (or not) credit cards. Also, I really want to hear how you paid of all your debts in 2.5 years! DAMN!

      • 0

        Hi KaeLyn,

        It does sound like we fundamentally agree on not just using credit for everything. That’s an awesome accomplishment to buy a house. Congrats!

        We used the Dave Ramsey Snowball Method to pay off $60,000 in debt. I may not agree with Dave’s politics but he knows what he’s doing if you are looking to pay off debt quickly. http://www.daveramsey.com/blog/how-the-debt-snowball-method-works

        I hope to read more finance articles from you on AS. Our community deserves as much financial education as possible!

        • 0

          I’m actually writing a companion article to this piece right now that showcases the snowball method as an option for paying off debt. I’m so glad it worked for you! I subscribe to the snowball method, but not to the extreme that you have been able to! I personally need some discretionary money for things like eating out and entertainment or I will literally lose control and make bad binge decisions. But I agree it is a great method! With my discretionary budget aside, all my extra income goes to “bad debt” payments. I can’t wait to be out of debt so I can start working more on my retirement fund, which is being funded, but not at the level I’d like it to be. It’s hard to have to decide between paying off debt or investing in retirement, but that’s where we are! I hope you continue to comment on these articles and offer your life advice! It’s so valuable!

          • 0

            I was super hesitant to do the snowball method because the math doesn’t make sense AT ALL. I realize now it is 100% about behavior modification and not math. This method helped us knock out smaller debts first which kept us excited. We totally celebrated the small victories. You get these little wins and the momentum picks up and pushes you through to the bigger debts. Looking forward to your next article!

  41. 0

    Just wanted to check in and say with the guidance of this article I applied for my first card (a student card) and got approved! Thank you so much again for all this great advice, I feel 1000% more confident going into this crazy world of credit!

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