Credit Card Quick

Credit Cards as Life Changes

Choosing Credit Card

Each and every person will encounter several different phases of life. From just starting out in in the world as a young adult to being in the midst of what is hopefully a satisfying and rewarding career to the laid back days of retirement, each stage is sure to come. For the average person, this also means changes in finances. If you carry a credit card, it is a given that you will want one that fits well with your financial status. Often, this means that as each stage in life rolls into the next, it might be time to look for a card that fits your needs at that point, as opposed to carrying a card that may no longer suit you. You will want a card that optimizes your credit and your dollar, giving you the best benefits possible.

Young Adults

Young adults are just starting out in the world. Many are college students, some working and trying to get an education; others are simply out on their own, working and trying to make a living. Either way, the budget’s probably pretty tight. At this point in life, most young adults are lucky to be making anything over minimum wage; they certainly have not yet landed that executive level job making six digits a year.

At this stage in life, training wheels are a good idea when it comes to credit cards. A young adult might ask a parent to co-sign or to become an authorized user on a parent’s account. Not a bad idea if the young adult is willing to share the cost of the charges and is exceptionally responsible in the use of said credit card. Still, some parents might fear doing this and taking chances with their own credit, therefore, a prepaid card might be the way to go.

Prepaid cards are attached to cash you have already deposited, therefore, your other cash is not tied up by this card and you can not run up a bill or overspend. Still, since there is no billing cycle, a young adult would want to practice this anyway y regularly paying the card back, in order to get a feel for other credit cards.

Also consider a secured credit card that reports your activity to the credit bureaus or a credit card with a low annual fee and mid-range interest that offers rewards and perks for things you purchase often, especially if you are a student.

Late 20s to Early 30s, Young Marriage, Starting a Family

Even if you’re making decent money, this is the point in a young person’s life where there are plenty of added financial responsibilities and squeezing a nickel becomes an art form. You learn to juggle responsibilities, pinch pennies, live frugally and still save some money. At this point in life, you want to look for a credit card that does not offer harsh penalties for spending. In other words, a reasonable interest rate. Also look for low to no annual fee and no balance transfer fees, as well as rewards that could really benefit you at this point in life, such as college savings plans, mortgage rewards, etc.

The Top of the Career Game

When you are at the top, you have perhaps seen a few things and gained a bit of experience and wisdom. This is the prime earning period, where you are set in your career, earning a reasonable annual salary and are faring well financially. You may not be wealthy, but you’re not really struggling either. Choose a card with an attractive interest rate, low to no annual fee, and decent rewards. If you have to travel for business, a card that offers miles and savings on hotels, rental cars, etc. might be quite rewarding. If you’re not a business traveler, think cards with cash back or some kind of savings plan.

Retirement Days

Retirement in itself is a reward. You have worked hard and earned those days of laid back living. Most people will, by this point in life, have saved a bit of money to live on and will be getting a pension and/or social security every month. Still, for the average person, the money is a bit tighter. It is a good idea to look for a card that can attach to your financial accounts, such as money market and bank accounts, so you can easily transfer money. This is especially good for those who choose to spend their retirement years traveling. If long journeys are not part of your retirement plans, seek a card that offers savings for eating out, seeing shows, purchases, etc., as well as the benefits of cash back rewards. Also remember to find yourself a card with a low or reasonable interest rate and low to no annual fee.

Whatever stage you are at in life, a credit card is a good thing to have. However, you want to make it work for you and work well, without spending tons of cash just to have those benefits.

College Students: Easy Ways to Begin Building your Credit Now!

Credit Score

The college years are filled with excitement and optimism, yet they can also be riddled with uncertainty about life after college. It is therefore of the utmost importance to start thinking about life beyond college, even if you’re still a freshman!

In particular, it is vital that you begin working to establish a strong credit history so that you can begin your life after college with a good FICO score in your back pocket. After all, your ability to obtain a car loan, a home loan or even a good job relies on a strong credit score.

How to Start Working toward a Great Credit Score while you’re still in College:

a)      Jump onto your parent’s credit card. If your parents are good with their credit, and if you are ready to take on the responsibility of a credit card, you may want consider asking your parents if they can add you to their credit card account as an authorized user. This is often a great way to begin establishing your credit history, and is a solution to the tight restrictions due to be placed on student credit cards as a result of the new credit card legislation.

b)      Ask your local bank or credit union if they provide student credit cards. Although these types of cards typically come with a low limit and a higher APR, they are still the ideal way to begin building your credit history. This is not the time, however, to get yourself into credit card debt. Make a point to purchase only needed items, and to also pay off your balance in full, every month, without exception.

c)       Consider a secured credit card if options A and B aren’t possible. Secured credit cards require a cash deposit equal to your credit limit, so that the bank will be protected in case of your failure to pay. However, they are also a practical way to build your credit history. Then, once you have established a strong credit history you can move to a standard credit card.

Thinking Ahead: Adding an Authorized User to your Credit Card

Introduction

As many of us know, it is possible to add an authorized user to our credit card accounts. Often, this may be a spouse, a teenage child or a family member that may otherwise not be able to obtain credit. Although this may be ideal in certain situations, it is definitely a decision about which you may want to think twice.

Any debt that is incurred on your credit card – regardless if it was charged by another individual – is your debt, and you, and only you, are responsible for it in the eyes of the credit card company.

There have been countless situations, for example, when an irate spouse, on the verge of a divorce, charges up credit cards on which he/she is only an authorized user. Or college-age children going off to school and irresponsibly and recklessly spending on their parents’ credit cards.

The bottom line is that adding an authorized credit card user to your credit card comes with its own set of risks. It is therefore of the utmost importance that you put a great deal of thought into this decision because, in the end, it is your credit and your finances on the line.

For example, I had a friend that agreed to add her brother as an authorized user to her credit card account because he had poor credit and was not able to get a card on his own. Although she made it very clear to him that he must pay the balance every month, the card’s balance quickly got out of hand and he was no longer able to afford the payments. Who was stuck with this debt? Yep, you guessed right: my friend.

After all, if she chose to not pay the credit card under the assumption that it was his debt, her credit score would certainly have taken a nose dive and the good credit she had worked for all of her life would have landed in the gutter.

It is important to understand that perhaps the very first mistake my friend made was allowing her brother to act as an authorized user. His bad credit should have been a red flag! After all, if was not able to maintain good credit on his own, what made her think that he would act any differently when it came to her good credit?

In the end, like anything else, the decision to place another individual on your credit card account is a very personal one, as each situation is truly unique. However, if you decide to put a loved one on as an authorized user, continue to closely monitor the account. If you notice any signs of abuse or if your loved one fails to pay the bill – even once – you can swiftly remove them as an authorized user.