Most kids get their first credit card when they start college, especially if college takes them out-of-state. A credit card is a big step forward on your teen’s path to adulthood, so help him or her avoid some common pitfalls by discussing the basic Dos and Don’ts.
- Do have just one credit card, and keep the limit between $500 and $1000.
- Do pay off your balance on time each month.
- Do keep your card active by using it for small purchases every three or four months.
- Do shop around for a card with low or no annual fees, as well as a low interest rate.
- Don’t let credit card payments exceed 20% of your monthly income.
- Don’t allow others to use your card and never give out the number.
- Don’t use the card for cash advances unless it’s an emergency. The interest rate on cash advances is often high and charged immediately.
- Don’t keep the credit card if you find you can’t control your spending. (If your teen doesn’t want to cancel the card outright, offer to keep it until your child pays down the balance.)
By following these guidelines, your teen’s first credit card can be a valuable resource for establishing a good credit history. The First National Bank and Trust Company of Newtown can help with a College Rewards Visa® card tailored specifically for first time cardholders.