Credit Cards: When is the Right Time to Get Your Own?
Have your parents given you a credit card tied to their account? No doubt this has been an easy way to pay for regular expenses. Plus, your parents breathe a little easier knowing you’ve got something in your pocket in case of an emergency.
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Graduation is right around the corner and while that means you’ll be taking the next step in your personal evolution, it may be a good time for your credit card situation to evolve too. Here are three reasons why it may make sense to get your own credit card.
1. You’ll Start Building Your Credit History.
The three big credit agencies, Equifax, Experian and TransUnion, keep records of your history of debt payment, how many credit cards you have and how much you owe. They put that and other information together to form your credit score; according to Creditkarma.com. But if you use a card on someone else’s account, that payment history doesn’t count towards your credit rating.
Your own card, however, can help you build a solid credit history that can pay off in the future, especially when you graduate from college. That’s because lenders look at your credit history before approving just about any type of loan, including a credit card or auto loan. In addition, when you apply for a job, insurance or an apartment, you’re credit scores may be evaluated as part of your application.
2. You’ll Learn Good Habits That May Last a Lifetime.
Let’s face it, when the bill goes to mom and dad, you probably aren’t 100 percent focused on how and when you’ll pay back the charges you make. With your own card however, you’ll typically learn to make payments on time, spend within your means and work toward a good credit score. In other words, you’ll learn to manage your money for now and for the future.
3. A Student Card is Perfect for College — and Beyond.
If you’re making the break from your parents’ card just as you get ready for college, consider a student card. It’s true that student credit cards carry low maximums, called a monthly credit line. In other words you may only be able to carry a small credit balance, say $500 or so. That’s because these cards are designed for people who likely do not have a regular income. Despite the limited amount you are allowed to spend, student cards are real credit cards. Your activity is reported to the credit agencies and from day one, you begin to build your credit history.
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Hanging on to a student card can work for recent college graduates too. You may be job hunting or taking some time off. During that time, you have the convenience of the card and you’re building your credit history. What’s more, some student credit cards come with rewards, such as cash back for gas or grocery purchases