This is my debut article for my new weekly column, Financial Education Explained by Danielle. This weekly column will feature my personal finance triumphs and tribulations, and hopefully students will be able to learn something new that they'll be able to incorporate into their lives for the better! 

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I wish my parents would have sat me down when I was in high school and explained what credit cards entailed instead of telling me “not to worry about it” until I got older. By the time I was 18 and a senior in high school, the majority of my friends and classmates had credit cards given to them by parents who said “only use in case of emergencies”--are weekly frozen yogurt runs considered an “emergency”? Well I hope for their parents’ credit card bill sake that they were. Apart from earning allowances from doing house chores or taking up any and all babysitting gigs from neighbors and friends, getting a credit card was, to an extent, their first taste of financial freedom. Though they may have been old enough to get a credit card, their parents or guardians were still paying for it. The aforementioned isn’t always the case, but it was certainly the reality I was surrounded by. If you’re anything like me and never had the credit card talk with your parents or guardians, well then I’m about to give you the low-down on credit cards.

I’m here to dispel the rumor that credit cards are full of “free money.” You’ve probably heard the following terms: “maxed out credit card” and “credit card debt.” The former refers to what happens when you spend the the full credit limit that the credit card company allows you to spend. They set this limit believing that you’re responsible enough to handle paying back that amount at some time in the future (not necessarily in full by the due date). It’s essentially how much the bank is loaning you. The latter term describes the financial trouble you don’t want to get caught up in. Credit cards have interest rates (did I mention double digit interest rates?), and if you don’t pay the amount in full by the due date, then you’re essentially going to owe the bank the remaining amount plus the interest on that leftover amount. In addition, it’s always good to be mindful of your credit score. It goes without saying that paying your bills on time is the most important factor regarding your score, so be wary to never voluntarily put yourself in a financial situation that could upend your credit score.

My credit card story goes a little something like this…

Even though I formed a steady relationship with the bank I was--and still am--with, I was denied a credit card on two separate occasions. They cited that my lack of a credit card history, coupled with my dearth of income (I was still a student at the time I applied, so I had no real income besides money I received from family for groceries), meant that I was not eligible for a credit card. It was job hunting cycle déjà vu: I’d never worked previously, nor did I have a steady income. At that point, I questioned whether it was ever worth applying for one again...

Months later after I started working a full-time job, I tried my luck and applied for yet another credit card (this time with a different bank). Third time’s the charm, right? Well, it happened to be so! I was ecstatic to say the least. After reading the fine print that came with the card and setting up an account, voilà! I was financially responsible for my very own credit card at the legal age of 21 (Important: If you are under the age of 21, you will need to get a co-signer or have an independent source of income to be approved for your OWN card). After much consideration and countless hours spent researching and comparing, I decided on a cash back credit card because I knew that I would use it mostly at establishments where I would earn money back just for giving my patronage there.

My two cents:

• Learn the value of a dollar before you apply for your first credit so you have an idea of what things truly cost;
• Take the time to research what kind of credit card is best for you after self-evaluating your spending habits; and
• Track your spending because a credit card is just an advance until you can pay it back with your main source of income.

Up for discussion:

• If you feel like you’re ready to have your own credit card, how would you facilitate that conversation with your parents or guardians?

• Do you have a credit card? If so, what kinds of items do you purchase with it?
• How do you keep track of your spending habits?
• If you’ve ever had a credit card, and after reading this article, do you feel more or less informed on how to better use it?

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If you liked this article, check out this NGPF Lesson: Selecting a Credit Card to learn the factors to consider in choosing a credit card!

About the Author

Danielle Bautista

Danielle is a native of Southern California and a recent graduate from the University of Maine, where she braved the frigid winters—a feat in and of itself—and earned her Bachelor's degree in International Affairs. She has a passion for working with non-profit organizations and serving populations in underprivileged communities. When Danielle isn't writing NGPF blog posts, spearheading various outreach projects, or managing contests and flash surveys, you can find her doing some sort of outdoor activity, learning a new hobby, or cracking what she thinks are witty puns!