Credit card advice to me when I was younger – The Points Guy

news7g03/31/2023

1 6 minutes read

Editor’s Note: This is a recurring post, regularly updated with new information and offers.

Some people collect stamps, while others collect trading cards or coins. But if you’re like many of us at TPG, you can collect credit cards.

With 10 credit cards in my wallet, I most likely have more credit experience than the 20-card average.

I’m proud to say I’ve never missed a payment while juggling nearly a dozen credit cards. In return, my credit card has earned me thousands of points and miles to travel to far-flung places — all while building a excellent credit score.

Based on what I know now, here are six credit lessons I wanted to tell myself when I was younger.

Begin

There is a quote attributed to Norman Vincent Peale: “Any action is better than no action at all.” This principle applies to many different aspects of life, but it is especially true for people who are just starting to use credit.

For most of us, your first card probably won’t Platinum Card® from American Express. This luxury travel card not only comes with a $695 annual fee (see rates and fees), it also Requires a good to excellent credit score to qualify.

To be approved for a premium card like Amex Platinum, you need to have enough credit history to prove to the issuer that you can make the monthly payments. That’s why it’s so important to develop a credit strategy as early as possible—even if you don’t sign up for a premium card.

I began my credit journey on my 18th birthday. As a gift for myself, I signed up for a student credit card.

Although it doesn’t come with all the bells and whistles in my current cards (some of them carry over $550 in annual fees), it taught me invaluable lessons about managing my credit and mastering the art of being financially responsible.

Finally, your first card should have no annual fee on your first card it means it will be limited in perks. That’s to be expected, though, as the first year is all about building your credit portfolio.

Follow two rules

You don’t need to be a credit expert to sign up for and manage your first credit card, although you should know what you’re signing up for. If you take anything away from this guide, remember these two rules:

Pay your monthly balance on time and complete – every month.
Never charge more than what you can afford.

Whether this means you Set up automatic paymentscreate weekly reminders to check your account balance or use your card only for essential expenses, following these guidelines will ensure that you keep your credit in top shape .

Opening a line of credit comes with a lot of responsibility, but these two simple rules will help you avoid late interest and fees. They will also improve your credit score over time, taking me to the next…

Avoid misinformation

I grew up thinking that credit cards are evil and that the issuers are here to hunt down innocent consumers to increase profit margins. Sound familiar?

Have much misinformation and incorrect assumption about credit cards. Many of us have been taught that Debit cards are a smarter financial choice than credit cards; In many cases, that couldn’t be further from the truth.

Luckily, we’re here to debunk some of the most common credit card myths:

Take the time to research What does your credit score mean? and why it’s so important — and then take steps to keep it as high as possible.

Shopping around

For most beginners, the easiest way is to open a credit card at a bank where you already have a checking or savings account. For me, that was absolutely the case. I opened a student card with Wells Fargo because I didn’t know what my other options were.

Of course, it’s nice to have a common credit card and bank statement all organized into one account—a good option for those who don’t want to manage a lot of logins.

But I recommend my younger self to shop around. If you are studying, student credit card is a great place to start — and the options have improved dramatically over the years.

If I could do it all over again, I’d open a student credit card with Capital One or Chase. Here are my top recommendations:

The best part of any of these cards is that there’s no minimum to redeem your rewards (even if it’s just $10 cash to cover a meal at Chipotle). That would be a game changer as a college student, as my Wells Fargo Cash Back College℠ card has a $25 minimum redemption amount — and only 1% cash back on all. all eligible purchases.

Information about the Wells Fargo Cash Back College card has been independently collected by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.

Avoid foreign transaction fees

While paying your bills in full and on time can avoid interest and late fees, there are other fees associated with credit cards. One of the most common things — especially on student cards and many free annual cards — is swiping a card outside of the US.

I do not know about foreign transaction fees while studying abroad in Paris, which cost me hundreds of dollars. Both my debit and credit cards charge a 3% foreign transaction fee for each purchase — and you can only imagine that amount starting to grow over time.

If you’re traveling internationally, you can avoid these annoying fees by opening a foreign transaction-free card. The three Capital One student cards mentioned above waive these fees. Also, check out our guide to find out best card with no foreign transaction fees.

Earn points and miles

Once you’ve mastered the fundamentals of credit, it’s time to broaden your horizons.

Whether it’s spring break or summer break, points and miles can unlock hundreds – if not thousands – of dollars in “free” travel.

One of my favorite Chase Ultimate Rewards is for Air France business class. NICK ELLIS / POINT PERSON

Finally, it was time to put my cashback card in the (figuratively) sock drawer and register for the first time. travel credit card.

I wish I applied for me Chase Sapphire Priority Card earlier; it is truly one of the best cards to earn and redeem points while traveling. It comes with an annual fee of $95 but a great sign-up bonus, great earning rates, and other benefits to boot:

Get 60,000 bonus points after you spend $4,000 in the first three months of account opening — $1,200 based on Valuation of TPG.
Earn 5 points per dollar on travel booked through Chase Travel Portal5 points for every dollar on Buy Lyft (until March 2025), 5 points per dollar above Peloton devices and accessories for $250 or more (through March 2025, with a limit of 25,000 bonus points), 3 points per dollar on dining, select streaming services, and online grocery purchases (excluding Target, Walmart, and questions) wholesale club), 2 points per dollar on all travel not booked through Travel Portal Chase, and 1 point per dollar on everything else.
Transfer your Chase Ultimate Rewards points with a 1:1 ratio for 11 airlines and three hotel programs, such as Southwest Quick Reward And Hyatt’s World.
Redeem your Chase Ultimate Rewards points at a premium rate of 1.25 cents per point (instead of just 1 cent per point) on all travel booked through Chase Ultimate Rewards.

Combining daily purchases and travel spending on the Chase Sapphire Preferred can earn you thousands of points and miles annually.

When you’re ready to upgrade your rewards game, it’s probably a good idea to keep the first credit card you opened—especially if it doesn’t have an annual fee. Cancel the card may have adverse effects on your credit score. It’s also a good idea to charge a small fee on the card every few months to prevent the issuer from pre-applying. close your account due to inactivity.

bottom line

When it comes to credit cards, you’ll hear all kinds of mixed advice from your friends and family. As I had first-hand experience with my credit cards, I quickly learned many lessons that changed my outlook on money. By using credit cards as a tool to improve my financial situation, I was able to reap all the benefits. I hope you can, too.

Additional reporting by Ryan Smith.

For Amex Platinum rates and fees, click This.

news7g03/31/2023

1 6 minutes read