When I was in the fifth grade, I was in a program for gifted students in the public school that I attended. This program was lead by an eccentric man that had an unprecedented passion for United States history and for proper grammar. There are a few things that I learned in this class that have stayed with me in the twelve or so years that have since passed. One is that you never use the word “where” in a place in which the phrase “in which” is appropriate. The other is to fear the very word “plastic.” The fear of credit cards as a path to certain doom was ingrained in me, as I imagine many people, at a very early age. Of course, as my eighteenth birthday approached and the credit cards started rolling in to my mailbox, I quickly changed my tune.
Unfortunately, I was not well versed in the logic of how to properly use a credit card, and like many of my contemporaries, I quickly found myself understanding why the eccentric fifth grade teacher I’d had long ago was so opposed to the idea of credit. This was, of course, because he held the same stigmatized vision of credit that paints it to be either a saving grace or bankruptcy waiting to happen. If used properly, however, credit is neither of these things. In fact, when you learn to appropriately use your credit, it is a source of leverage for purchasing power. With good credit, you are more likely to get low interest credit cards, better annual percentage rates on home loans, and get approved to borrow more money at a lower rate. Once you are in the dog house, it takes a while to beg your way back to the bedroom, but restructuring your credit is not ever a lost cause.
The important thing to remember about a credit card, is to not include it in your mental picture of your own personal assets. Credit cards do not give you more money, just a different option for how to spend the money that you already have. Remember to make payments on time each months. The consequences go beyond late fees, and they add up quickly. These things can be daunting if you have never had a credit card, or have never thought about ways to improve your own credit rating. However, by following a few simple rules, you can build good credit, or repair damaged credit quickly and easily.
First, don’t spend outside your means. If you have four hundred dollars in your checking account, and a fifteen hundred dollar credit limit, you still have four hundred dollars in your checking account. The bill will come at the end of the month, and then you’ll have to figure out how to pay it. Second, always make payments on time. Third and lastly, try to make your payments in full. This way you avoid a lot of interest charges and build a great credit record. If you follow these simple rules, you will be in great shape to do whatever you need to do financially.
