*I am not offering financial advice, and in no way shape or form am I qualified to provide financial advice. I’m just sharing my experience of having my very first credit card*
About a year ago, I signed up for my first credit card as a way to start to build my credit.
All throughout high school and college I was so scared to have the almighty credit card. While I’ve always worked for my own money (most times, having multiple jobs at once), I was honestly terrified at the thought of a credit card. I didn’t understand how they worked, I feared having to pay tons of fees and interest. I also feared that my credit would plummet – mostly because I didn’t understand how it worked.
But about a year ago – after graduating college, getting my first “big girl” job and moving into my first apartment with Billy – I decided that it was time to start building my credit.
So, I poked around on the interwebs, asked friends and family on which credit card was best. My dad reassured me that I should definitely start building my credit – making small purchases (like gas, groceries, etc) and paying it off each month.
And I did just that. I made small purchases each month and paid them off.
My golden rule to myself was to never purchase something on my credit card that I wouldn’t have been able to pay for upfront. Meaning, if I was going to buy something on my credit card, I would only swipe the card if I could have been able to purchase it outright with cash.
Most credit cards (depending on the one that you choose) offer you great incentives for the first year or so. The one that I ended up choosing offered me 0% APR for the first 16 months. Meaning, I wouldn’t have to pay any interest on purchases I made until that 16 months was up.
But, along the way… Emergency expenses started coming in. For example, I had to pay for car repairs and maintenance (which can be very pricey). While I could have paid for these repairs outright, I decided to take advantage of the 0% APR that my credit card company was offering me. Instead of paying for the repairs outright, I could space the payments out.
I found that the credit card, while having the 0% APR, was extremely useful. However, we’re approaching the end of my 16-month “no fee” term. This morning I officially paid off my entire credit card in full. Next month the annual fees and interest are supposed to kick in. I didn’t realize this until this morning and immediately started researching how much that interest would cost me.
While my balance wasn’t crazy high, it was definitely more than I was comfortable having to pay interest on. Those little tiny purchases and emergency moments while you’re in the 0% APR timeframe can add up.
For me, it made more sense to just pay the credit card off in full, taking my balance down to 0 and avoiding paying the high interest rates from the credit card company.
So, the purpose of this blog post is to remind us all (mostly myself) that staying on top of your finances, knowing what you signed up for and the end dates of the “free offers” is vitally important. As young adults, it’s our duty to educate ourselves and take responsibility and control of our lives in all matters, including finances.
Going into the new year, becoming more financially literate and educated is one of my goals!
While this year comes to a close, go through your monthly expense sheets (I shared mine with you all before). Take note of the hidden costs and things that you’re paying for such as subscription services, extra fees, etc. Reevaluate where you’re money is going!
Hope that this blog post was a helpful reminder for us all to check in on our financial health!