i am 15, and i want to learn about credit cards,can someone teach me?

Question

i just want to know do you have to have one when you get older?

are they bad to have?

and how do they work?

Answer 1

Credit cards are not bad, but many people do not use them properly. 1st of all, when you get older, you will start getting TONS of offers for credit cards in the mail. Read them carefully before you fill out the applications and send them in. You should only apply for 1 major credit card- do not apply for department store cards!!! Another thing to look at is all the small print that is on the application. Find out what the interest rate for the card is, if there is an annual fee, etc... Do not get a card with an interest rate that is high or one that has an annual fee on it. Now, as far as how they work. A credit card is basically like money you are borrowing. You go to the store, purchase something and pay for it using the credit card. When your statement comes in the mail, it will list all the places you shopped at and the dollar amounts. Now, here is the MOST important thing!!! You must pay that full amount off each month. Credit card companies are so smart because when your bill comes, they tell you all you need to send in is the minimum amount, which is usually this really small figure. Don't fall for it! Send it the full amount. If you don't, you will suddenly get caught up in the trap of only sending the minimum amount each month while still spending more on the credit card. Then if you find yourself out of work for some reason, you will not be able to pay the credit card off and meanwhile, you are being charged interest! So many people have fallen into this trap and can not get out.So, if you use your credit card wisely, you will not have any problems and it will build up your credit and increase your FICO score. My motto is this- if I do not have the money in my checking account available to make the purchase, then I do not use my credit card to make the purchase! Its that simple.

Answer 2

You do not have to have a credit card. However, when you go to get a house or car one day, they can be helpful because they affect your credit score. Your credit score is a kind of like a grading system on your "credit". There are three major companies that report your "credit". These are transunion, equifax, and experian. There are many things that effect your credit- such as any contract you may sign, like for a cell phone, anything you have "financed" like if you go into a store to buy furniture, but you don't have all the money, so you will fill out an application, and they can "finance" you and you make monthly payments instead of paying all at once. Paying all your bills effects your credit. If you make LATE payments, its bad. if you want good credit, you always want to pay ALL of your bills on time. Also, you can pull your credit report to see how you're doing. This way, if there is something on there that shouldn't be, you can dispute it. Anytime you pull a report, or you apply for a loan or financing, this can count against you as "too many inquiries".

Credit cards CAN be bad to have if you are not responsible. Some places, especially if you are young and haven't "built up" your credit to a good score yet, can charge you a high interest rate, forcing you to never really pay for what you bought, because you're only making payments on interest. This can make it easy for people to get a lot of debt, and really hurt them financially.. Let me explain how they work so you can understand. Let's say you go into a bank and apply for a credit card and are approved. If it's your first one, your "limit" will probably only be $500 or so. That means, they give you a card, and you can spend up to that $500. Then, each month they will bill you a percentage of that $500, plus however much they charge for interest. If you only pay the minimum and no more, it will take forever to pay off that amount.

So if you have a 500 limit, and go spend 100 somewhere, your next bill might be 50, but 38 dollars of that may be interest (what they charge for giving you the card) and so your balance will still be 82 dollars. The best way to make your credit GOOD on a credit card is to make a large purchase, pay the minimum amount (what they bill to you) for a couple months, and then the next month, pay all of the "balance" (what you've spent on the card) off. I've done this since I've had mine and when you're good, it will boost your credit score and most of the time they will increase your limit too. There are also secured credit cards, which I recommend for first-timers. How these work is when you get the card, you will automatically give them the 500 dollars, and so you will only pay for interest.

Your credit is really important like I said. When you are older, you'll want to buy a house or a car. If you've ruined your credit by then, it will be harder for you to qualify for the amount of a loan you want, of if you do, you will end up paying so much more than you would have to in interest. So just be careful now. It's great that you're getting information now, so you'll be prepared when you're ready.

Answer 3

credit cards r bad, debit cards r good and u'r parents can help u w/this at the bank now if u have an allowance or going to work part time soon or babysit.
u'r 1st credit card is going to have a high percent per dollar u owe back to them. usually apx 23%, so that is 23 cents per dollar per month u will owe. if u pay the credit card back in full before the due date there is no percentage owed.
if u receive 2 or more credit cards and u r late or very behind on 1 what they r doing now is the card w/the highest percentage owed is now on all of them.
if u receive very good credit u can get a card w/only 10% owed.
1 credit card is good to have when u r older in case of sudden car repair or home repair, etc.
if u want more than 1 card do not ever get store cards, they have the highest amount owed. yes, they will tell u that u will receive discounts but in the end u lose.
and have no more than 3 cards and use them to establish credit and purchase 1 item for apx $50-100 to keep it active.
if u went to purchase a home or car they may say u have to much credit available and deny u because u have too many credit cards.
now for the debit card. w/that u have to keep track just like a checking account. if u spend more than is in u'r bank account the bank will charge u an overdraft fee of $15-30 depending on the bank and on top of that they may charge a per day fee after the overdraft fee each day until u r caught up.
if this happens too often they may close u'r account and u have bad credit and another bank may not take u as a customer.
what a great learning tool.
ps. when u get a car do not use debit/credit cards to purchase gas. many gas stations charge u'r account up to 3x what u pd for gas and this will make u'r bank account "bounce", overdraft. the government is trying to stop it but not working at it too hard.
hope this helped and i get a good rating.
have a super wk!

Answer 4

Your 15..... I guess in another year, it would be a good idea to get a little checking account and 'debit' card so you can understand that a 'charge' card should be used so that it's PAID OFF every month.

Charge cards can be really good because you don't have to carry cash around - but.... people sometimes can't control their spending and actually CHARGE more money than they can pay..... so then the bank charges interest on that money (because now it becomes a loan) so if you charged $100 and only could afford to pay $25 - then your next bill might be 84.00 because there is interest....

If you continue that behavior, interest adds up and becomes interest on interest.... In other words - if you made a $5 payment on the $84 - your bill the next month could even be more......

The best habit is to make sure you pay it off every month - or your better off SAVING for what you want....... A debit card is a card you use like a charge card but the money comes out of your checking account (so the money has to be there).... it's good practice for you and will help determine how responsible you will be with a charge card.

Answer 5

Ask Dave Ramsey! He's the man! If ya wanna really learn about credit, Dave Ramsey has a Radio and TV talk show nation wide... You're at the perfect age right now.. Be thankful that you can learn about this now, before you end up in debt at the ripe old age of 18 after those credit card companies bombard you with that "pre-aproved" credit junk mail! I've included Dave Ramsey's web site link at the bottom! My best answer for you is Stay Away from those credit cards.. You can use a bank debit card to purchase things the same way you would use a credit card.. Good Luck to you and hope you make the right decisions...

Answer 6

Credit cards are not mandatory but they help a lot, for internet shopping and car rentals or even movie rentals you do need a credit card.

Credit cards are not bad to have if you are good with money, the only way they are bad is if you spend more money than you have and then you can't pay off your debt.

Credit card are like taking out a loan. You buy something on your credit card and at the end of the month you pay it off. If you can't pay your bill (or the minimum payment witch is usually about $10-50, depending on your credit card) at the end of the month they charge you interest on your purchases. You can also take out money just like a debit card but then they charge you interest right away.
Credit cards can be good if you always pay it off, they can help you build credit, which will then allow you to get loans easier, buy a house, or a car, or other large purchases.

Answer 7

The only thing to remember is: If you don't have the money available, don't buy it. It is better to save up than get yourself into debt. A credit card can make you think that you are not spending money. They allow you to 'buy' things and pay back in small amounts, but at the same time, charging high interest to do so. This means that you will always pay more money for something. If you need to have a credit card, pay off the full balance every time you buy something (you don't get charged interest). The only time I use mine is when there is no other method of paying, or if I need something and I know the money will be coming in in the next week or two.

Answer 8

Credit cards are good to have on hand for things like renting a car or booking reservations or emergencies. Don't use them unless you have to, and always pay off the balance in full when you get the statement. Credit card interest is high, even for folks with good credit; and extremely high (all the law will allow without calling it usury) for folks with less than good, or new, credit. Don't ever use your credit card for cash advances...the interest really soars on that. Never have more than one or two cards. Potential lenders look at an unused credit card as if you already owe that much (the credit available on the card) money, since you could, theoretically get a cash advance for that amount at any given moment. That is why you only want to have one or two, preferably low credit limit cards. How do they work? They work by making it very attractive to use them, and then charging as high an interest as possible, as discussed above. Like I said, use them only when you absolutely have to. Have to and want to are two different things. If you keep that difference in mind, you will do okay. But yes, you do need a credit card in today's world, even if just as another proof of identity.

Answer 9

This country is built on credit if you have it , it will get you things you want easier. Credit cards are good to have but not more than 2-3 max. People find it ez to spend the money but not to pay it back. When anyone offers you credit cards you always should look if 1. The most important always get a card with the lowest interest rate, this is the amount of money they will charge you to borrow their money 2. Is there a annual/monthly fee to have this card, get a card that does not have this 3. Always repay the money you used on time or this will make your credit score be negative 4. Never spend more than you can afford 5. If you can manage to pay more than your monthly minimum then do so you don't want to give them example 4 dollars for using 1 of theirs.

Answer 10

Don't use a credit card for credit. Use it for convenience. Pay it off every month in full.

If you need to overspend, establish a credit line (usually close to the prime rate) and pay it off quickly also. If you own a home, you can use a 'home equity' credit line and deduct the interest if you itemize.

Make it a habit not to owe much. My mortgage is my only debt. Learn to keep cars a long time. Buy them a year to two old (for cash if possible) and keep them another 10 years. 3 of my family's 4 cars have over 100,000 miles on them and they are still going strong.