Do you remember your first credit card? I got my first card in January 1987, a Visa through Carolina Telco Federal Credit Union. I was four years out of college and hadn’t yet built up a savings account. I was tired of begging for installment plans when unexpected expenses – a set of new tires, five fillings in my teeth – cost more than I earned in a week.
Your first credit card can be the first step toward an excellent credit history and credit score or, sadly, the start of a credit disaster. I paid my first card off every month en route to building a credit score that flirts with 800.
Here’s what three personal finance bloggers did with their first card – and what they would tell their younger self now:
Toni Husbands, financial coach with DebtFreeDivas.org
First credit card: A Dillard’s store card
“I remember my first purchase was a name-brand pair of shorts,” Husbands says. “I paid too much for them, not to mention the interest that I was carrying. The minimum payments were really low, so I don’t remember being bothered by making them. I just never considered how much those shorts actually cost in the long run. I was very foolish.”
Why? “I probably signed up just to get a crazy freebie – a T-shirt or some other nonsense item. I wanted to look the part on campus, keep up with trendy fashions and just rebel. I do remember my mother cautioning me against getting credit cards. But what do parents know, right?”
How that card worked out: “By the time I left college, I had $2,000 in credit card bills. I’d picked up another card and used it to fund a lot of my travels. It took 10 months to pay that off and was a bit of a burden trying to pay my living expenses with this credit card bill.”
Advice for her younger self: “I would advise my younger self to take a few financial literacy workshops so that I could learn to understand interest rates and how that impacts the overall cost of things purchased on credit. I knew nothing about credit at all when I signed up for a credit card. I was only focused on the minimum payment, and I know that I wasted a lot of good money paying interest versus being able to save early and earn interest.”
Erin Lowry, creator of BrokeMillennial.com and author of “Broke Millennial: Stop Scraping By and Get Your Financial Life Together”
First credit card: USAA Platinum MasterCard for College Students
Lowry got her first credit card when she was a freshman. “It had a $250 credit limit that got bumped up to a whopping $500 by the time I graduated.”
Why did she get it?: “I was fortunate enough to go to college without any student loans. I had a partial academic scholarship and my parents paid the other 50 percent. My dad advised me that I should get a credit card to primarily build a credit score.”
How it worked out: Lowry took her dad’s advice and made one small purchase a month and paid the card off on time in full every month. She graduated with a 720 credit score.
Advice for your younger self: “I would tell myself that it’s OK to use the credit card. I honestly didn’t really start using it much for about a year after I got it because I was too freaked out about how it worked. I never missed a payment and should’ve trusted myself earlier.”
John R. Schneider III, one-half of the DebtFreeGuys.com couple
First credit card: Discover card
Schneider got his first credit card when he was in college, between 1992 and 1996.
Why did he get the card? For emergencies and to build a credit history.
How it worked out: “I had a savings account and a meal plan with the school cafeteria, so I rarely used it,” he says. “In fact, the only time I remember using it was for my gym membership that wasn’t part of the college. The gym required an auto-draft from a credit card.
“My problems with credit cards started after I graduated from college and moved out on my own. I didn’t really understand the risks of credit cards. I saw it as free money and spent accordingly. It wasn’t until my credit card account balance was close to $30,000 that the risks were apparent to me.”
Advice for his younger self: “I would tell my younger self to ask questions and do research on any financial product I consider using. This applies to credit cards, investments, HELOCs (home equity lines of credit) and more. Just because a commercial or investment professional says a product is great, doesn’t necessarily make it so.”
As for me, I’d just tell my younger self, “Thank you.” Thank you for paying that card in full every month, for not getting me started on bad habits and not piling up a huge mound of debt for my older self to pay.