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When should I get a credit card? Do I really need one? Where should I get one? You’ve got questions. We’ve got all the answers.

Why get a credit card?

In the future, things like a house and car will likely be way out of budget for you to make a one-time payment. (It’s not just you, it’s everyone.) So you’ll have to borrow money to make those purchases. In order to be approved for a mortgage or car loan, the bank wants some assurance that we can trust you to pay it back over time. Establishing a credit card account and using it responsibly helps with that.

When you use a credit card, your activity is compiled into a report (called your credit report) based on how you use your card(s) and then those facts are turned into a score (called your credit score). The higher your score (up to a max 850), the more likely a lender is to trust you enough to give you a loan, and the lower the interest rate you’ll pay for it — which is the goal. So, if you start building credit early, down the line, your bank account will thank you. “It’s a great way to start building credit,” says Kristy Archuleta, Associate Professor in Financial Planning at the University of Georgia. She recommends using your new credit card to buy routine monthly items, like gas and groceries, and pay off the balance in full BEFORE the end of each month, in order to positively jumpstart your credit life.

When should you open a credit card?

“The sweet spot is junior or senior year of college — if you are mature enough,” says Beverly Harzog, Credit Card Expert and Consumer Finance Analyst for US News and World Report. By opening a credit card this young, you have some time to establish a credit history so when you are ready to rent your first apartment, you’re more likely to be approved. (Yes, landlords check credit, too.) If you’re not ready for your own card or can’t qualify for one, you can ask your parents to add you to one of their cards as an authorized user, Harzog suggests. That helps build credit, too, as does opening a secured credit card (where you have to make a deposit with the issuing lender to get it - which we can do at FNB Community Bank!)

How do I know if I am ready?

Ask yourself: Do you have a debit card? If the answer is yes, do you make impulsive purchases? Have you ever overdrawn fees on your debit card? Overall, could you have done a better job in managing that debit card? If you answered “yes” to one of those three questions, you might want to hold off on opening a credit card until you have established better spending habits, says Harzog. If you are known to have problems with spending, you should hold off, too, says Archuleta. The freedom of credit can lead to overspending which could get you into debt — something you definitely want to avoid.

Which credit card is the best?

For your first card, it is wise to talk to a personal banker at FNB Community Bank about the best options. Our number one goal is to set our cutomers up for financial success. There's no doubt that you will eventually start receiving credit card solicittions in the mail from other financial instituitions, but be sure and read the fine print so you know of any fees that could pop up down the line.

Have more questions?

Call us today and we would be happy to help: (405)732-4571.