When you’re 18, three important pieces of mail start streaming through the mail slot: jury duty notifications, college literature, and credit card applications. Many young ones end up filling out just as many credit card applications as they do college apps, seduced by the flashy low interest rates and the idea of a way to pay for things without any cash dollars.
This can be dangerous, and while acquiring a credit card as soon as you’re eligable isn’t necessarily a bad idea, it’s important to get a hold on your banking basics beforehand. Perhaps solicit mentorship from a responsible adult–maybe an entrepreneur or a business owner you know and who knows a little something about finance. If one of these movers and shakers isn’t in your kitchen making a protein smoothie right now though, consider following these simple steps before opening up the credit card can of worms:
You can’t do banking without a bank–so sign on with a good one that offers special student deals. It may seem like all banks are the same, but they really aren’t. While some that specialize in business banking for instance charge for checking accounts and have minimum balances, others offer free services and have no secret monthly fees. Draw up a list of questions with your mentor and go in to speak to a branch manager in person.
Sign up for as many online features as possible. Online banking is a great way to keep track of your expenditures. It’s also safer, since most functions are password protected and you can set up different email alerts. You could potentially identify a card fraud much earlier than if you simply read your paper monthly statement.
Know your credit score. There are three national agencies that monitor everyone’s credit and then assign a number, or grade, based on how good a credit user you are. Most newly-minted adults won’t even have one, but you should understand that the minute you take out so much as a Macy’s rewards card that it can count for or against your score depending on how responsible you are with payments. This is definitely something to inquire about during your interview with the bank branch manager and your mentor, who can help you get a grasp of your score and what it means.
Read the fine print. Ok, so you have your checking and your savings account and your mobile bank app and your fresh, clean credit score-you’re feeling like a banking super hero and think you can handle using a credit card responsibly. Our advice would be to start with only one, and to choose that one with the same care that you chose your college. Read the entire contract, even the small print. If you don’t understand a word, highlight it and ask your banking mentor about it when he’s done making his protein smoothie. Weigh the card’s perks with its downfalls. For example, a lot of cards offer really cool rewards like frequent flier miles, but only if you charge a certain amount per a month. Conversely, there are many no-frills cards that offer things like lower interest rates.
Think about your lifestyle, choose the card that’s right for you, and enjoy a new feather in your adulting cap. (PS–try not to impulse charge a Playstation 4. We promise you’ll regret it).