Hey Everyone! It’s Djeneba and welcome to “Blossom With Me.” Today we’ll be discussing Finance for teens. I wanted to start this series because I am a senior and I will be starting college this year. I think it is important for me and others my age to know about financial literacy  as it is a crucial part in life. I decided to talk about credit cards since I believe that it is one of the most intimidating parts in finance for beginners. 

Many people don’t like credit cards because of the idea of accumulating debt. Once you accumulate debt you may not be satisfied with life because a bad credit score can prevent you from purchasing things that you like all because you didn’t pay all the money back in time and now you have interest building up. I am here to tell you that should not be the case. Credit cards are not scary. I know people who have never been in debt and they have had credit cards for years. So, who can have a credit card? You can not have a credit card until you are 18, but if you have a parent or guardian or someone that you trust that is 21 or older than you, you can become an authorized user on the parent or guardian credit card.

You may be asking, well how come some people have not been in any debt? Well… Sorry to break it to you, but it is all about discipline and being responsible. If you are irresponsible and spend knowing very well you can’t afford it, then it is your fault. Live by the rule that if you can’t afford it with your own money then do not take out extra money that you can not afford. If you have 200 dollars in your bank account then do not spend more than 200 dollars on your credit card. Well… why would I not do that if I can buy more things with my credit then with my debit? Unlike some banks like the ones in Saudi Arabia which do not allow you to continue using your credit card until you pay back all of your debt with no interest included, the majority of credit cards accumulate interest and now instead of paying back 200 dollars you might have to pay back 400 dollars.

Credit cards have money limits. These limits are there to test you. The company that is lending you money is observing how responsible you are with money. So, when you first start off with a credit card they may give you a low balance of lets say 1,200 dollars. I would recommend that you spend less than a thousand dollars which makes it easier to pay off the card in time. The maximum number that you could spend on a credit card is most likely a number that you can not afford. As the company that lent you the credit card sees that you have been paying back the loan in time which is making it so that you have a good credit score, they may increase your money limits. Instead of having the limit of 1,200 they may increase it to 3,000 dollars. 

To increase your credit score you should use your credit card for daily or regular expenses like paying for groceries,new clothes, the new shoes that you want to buy, and others. You need to use the credit card in order to increase your score. And when you pay off your credit card, meaning that you are giving the company their money back, make sure you pay in full. You will have a statement closing date and that is when you will receive your credit card statement. You have 21 days after your statement closing date to pay your credit card bill. Your payment due date is the deadline for making an on time payment, if you miss this due date that is when you will start paying interest. So now you have to pay the money you owe and on top of that you will have to pay interest, which I call punish money. It will most likely feel like when a teacher says that the quiz that they’re giving you has only two questions, but then you get the quiz and realize those quote on quote 2 questions each has five parts. You will feel bamboozled cause you thought it was literally only two questions. 

Alright, so now let’s get into what people really care about when they want a credit card which is the rewards. Some credit cards give you travel rewards which basically means if you use the card enough and you travel a lot, you may be able to get a free ticket on a flight to go on vacation somewhere and you may get rewards at the hotels that you stay at, especially if the credit card that you are using has a partnership with a specific hotel. Other credit cards give you cash back every time you purchase an item. Some give you cash back on specific purchases like gas and some give you cash back on whatever you decide to buy.  

So, I told you all about the risk and how to take precautions. I have also told you why credit cards are so great if you use them properly, but now the question is how do you even get a credit card in the first place. Do you sign up online? Do you walk into a bank and ask a worker if they can give you one.  The first step is that you need to have a source of income or be under a parent or guardian account if you don’t have a reliable income or if you are underage. You need to have a social security number, so if you’re a non citizen you may be able to receive one. If you’re a college student you qualify for a student credit card even if you are paid little money from a part-time job. 

You will then have to research on your own which credit card that you like best because like I described briefly before, there are different credit cards for everyday life like paying bills and gas and there are credit cards for traveling and hotels. You must pick what is best for you. Credit cards usually ask for your name, date of birth, gross annual income, and living situation (rent, live with relatives, or own a home). And finally, you sign a document with your signature and date and you’re done! YAY! 

That’s it for today’s lesson. I hope you learned something new. Remember I talked about everything briefly, so you should want to do your own research on the side since I am not a financial expert. Thank you for blossoming with me! 

Source: 

https://www.thebalance.com/statement-closing-date-vs-payment-due-date-what-s-the-difference-5185217