Credit cards are a status symbol for teens. By using the tips outlined in this article you can turn that status symbol into a useful tool for your future.
1. Credit Cards as a Tool for Learning
Not that long ago students might be seen using their parent’s credit card when shopping. Today, credit issuing banks often advise parents to permit their teen to apply for and use a credit card in the teen’s name to begin preparing him for using credit in the future.
A common complaint of many adults burdened with high credit debt is that they never learned to use credit wisely. When they were in high school, credit cards weren’t use as widely as they are today.
The parents of many of them only used credit for special purposes such as buying an appliance or other large item. The idea of pulling out a credit card (form a wallet stuff with many credit cards) to pay for groceries or toiletries was considered to be the lifestyle of the rich.
Your parents did not have the opportunity to learn efficient use of credit but you do have that opportunity today. Talk to your parents about how best to use a credit card as a high school student.
Let them help you set a budget to follow for use of your new credit card. They will be co-signing for your first credit account and thus responsible for the debt if you do not pay the account on time.
2. Honest Communication
Your parents may place restrictions on the use of your student credit card. If you want restrictions removed, use the credit wisely and be open about the account with your parents.
It’s a wise parent who sets clear limits on what items are acceptable to buy on credit and which purchases should never be made with the credit card.
3. Following a Budget Plan
Learning to use a credit card to build your new credit file is easy if you first take the time to make a budget. High school students don’t worry about the utility bills or the mortgage. They don’t have to be concerned about stretching the food budget to feed the family for a week or a month.
However, there are expenses that student do have and can budget for. If you have your own car you will have costs for gas, oil changes, tires, repairs and the dreaded insurance.
You pay for school lunches and meet friends for sandwiches or pizza. You buy DVD’s and computer games (lots of computer games) and hit the mall to shop for clothes. You spend money and any time you are using money it’s wise to have a budget to help you know where the money goes.
4. Taking Responsibility
When you learn to manage money and to use credit effectively as a high school student you are in a position to move into adulthood with a skill many adults today sadly lack.
You cannot manage your life without managing your finances. It is said that money is not the center of your life unless you don’t have enough of it. This is true of people at all levels of income.
When you are a high school student you have no credit file. Your needs have been provided for by your parents and nothing has been purchased in your name. Your credit is a blank slate and there is no better time to learn how to write on it in a way that will enrich your life than when you are young and have parents to help you avoid pitfalls.
5. Learn From Your Mistakes
Credit cards designed specifically for high school students have low spending limits. As a young adult newly graduated from college and starting a new job, you might apply for a credit card and receive an account with a $5000 spending limit.
As a high school student the typical credit line issued is $2-300. When you are learning anything new, you may make mistakes. Learn not to hide your mistakes and pay attention to them so they don’t happen again.
If you forgot to pay the credit card bill, a large late fee added to your balance will remind you not to do that again. However, it will also add a negative to your new credit file.
Many parents are now accepting that student cards may be the best learning tool they can use for helping their student learn to control his personal finances.
With the tips outlined in this article, you can begin a journey to a life where money is a tool you can use to your benefit.