I have had a real love-hate relationship with credit cards over the years. I will never forget when I was approved for my first credit card at age 18. I was so proud and felt all grown up. I wish I could say that I acted totally responsible with it, but I cannot. In no time flat that hot little card was maxed out. For a long while I was making the minimum monthly payment and my balance never seemed to go down. It took me a while to figure out that credit cards were best used for emergencies and could be responsibly used to build my credit score.
Credit cards are a real must these days. You need one for so many things like making reservations and rental cars. So I understand the reason why so many young people rush to get their first credit card. I really wish that I had started out with a pre-paid credit card like the Green Dot card. I could have had the benefits of a credit card without all of the outrageous fees and interest rates that I paid, nor the risk of hurting my credit score. I could have had a chance to learn how to use my pre-paid card responsibly before moving on to an unsecured one.
There are many benefits to having a pre-paid credit card. It’s reloadable, so you can add more cash as you need it. You don’t have to worry about overdraft fees and have the security of making online purchases without revealing your financial information. It is also a great thing for teens to have. They can play online games and download music without asking for mom’s credit card. Not to mention carrying a pre-paid credit card is much safer than letting your teen carry around cash. It’s really just an overall safer way for students to manage their money.
You do need to be careful when signing up for a credit card. It is important to read the fine print. Otherwise you are likely to get hit with unwanted monthly and annual fees, not to mention a high interest rate. You can avoid many of these pitfalls with a pre-paid card. It’s also a good idea to do your homework on a potential credit card company. If you have questions about a certain credit card company before signing on the dotted line, you can check with agencies like the Federal Trade Commission who regulates credit card companies and banks. In my opinion, it is always a good idea to check on a credit card company’s record before taking the plunge.