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An increasingly common trend is for parents to get credit cards for their teenagers. But the big question is, “Is this a good idea?”

Maybe. It really depends on your goals, expectations and how your teen will use it.

The teen years are filled with pressure. It may well be harder for a teen to control his or her spending than it would be for you. Just think of all the things they ask you for. Can you trust them to not go on an uncontrolled spending splurge with a credit card?

I absolutely wouldn’t recommend giving a teen who isn’t holding down a steady job a credit card. How are they to pay it back? You do not want to do this for them, as you’ll be setting them up for poor spending habits later in life.

If you give your teen a credit card, it should be accompanied by a long talk about what you expect to happen. What are the rules for using the credit card? Is it for emergencies only? Are you going to remind them about payments or do they need to remember on their own?

Teens are lucky in that there are many credit cards for students out there. They may or may not need you to cosign. And certainly having a credit card can teach them early on how to be responsible for one. The only problem is that if they mess it up, they get a poor credit rating right out of the gate. It’s quite a risk.

Technorati Tags: credit cards for high school students, student credit cards

A good credit score matters when you’re about to try to get a particular loan, such as for a car or a house. A small difference in your interest rate will add up through the years, making it very worthwhile to get your credit score in shape before applying for anything. These are some things to consider at such times:

1. Don’t apply for other credit.

Each time you apply for credit, it can impact your credit score. And if you’re getting more credit cards, that’s an impact too.

2. Beward of closing out credit accounts.

A lot of people like to consolidate all their debts onto one card, and close the remaining accounts. This is a bad idea because you lose out on your credit history from those closed accounts if it’s positive. Painful as it may be to not use an open account, keep it open.

3. Pay all bills on time.

You might be surprised at what can get reported to the credit bureaus. It’s easier than ever to pay bills on time, with all the online and automatic payment options out there. Take advantage of these, and keep track of everything that you still need to send a check in for or that you need to long on for to pay.

4. Pay down your credit cards.

Companies like to see you using less than 30% of your available credit line. Don’t think that opening new accounts to increase your overall credit line is a good idea, however. It’s better to pay down your existing accounts than to open ones you don’t need.

5. Talk to creditors when you’re having problems.

Or not having problems. If you just want a lower interest rate, call and ask for one. It can happen.

But if you are having problems, call and ask them to help you. If you can even send in a partial payment and make it clear that you will keep paying, they can be lenient.

6. Check your credit report with all 3 bureaus.

You might be surprised at the mistakes that can sneak onto a credit report. If you’re going for a big purchase, you want this information to be as accurate as possible and you need time for incorrect negative information to be removed.

This means don’t leave it for a week before you want to start applying. Start a couple months out so that you have time to gather your information and so there is time for the information to be removed.

It really is necessary to check with all three. They can have very different information.

Money problems really take it out of you. They’re some of the most stressful things people deal with in life, short of the death or serious illness of a loved one. Money problems are well known for even breaking up marriages.

Money problems can seem hopeless sometimes, especially times like now with inflation at a 17 year high. Short of earning more money, it’s really hard to get out of trouble. What can you do?

The number one thing to do is to figure out what can be done. Look hard at your finances. You need to look at the mistakes you’ve made and the circumstances that have put you where you are now. How can you turn things around.

Sometimes this isn’t easy. If it’s an unexpected major medical issue or a job loss, it may not have been a direct financial error that got you in that position. Sometimes there really is nothing you could have done to prevent the situation you’re in. But you can certainly work towards managing it.

Talking to other people can be really helpful. If you know someone who is pretty good with money and you trust, talk to them. They may have some insights that will help you. Odds are you won’t like everything you hear, but give it some time to sink in and you may understand what was really meant.
But beyond that, you have to think on how you can cut back. Sometimes this takes some extreme measures, such as moving into a smaller home or apartment so that your monthly expenses will be less. This is one of those steps that makes you take a bit of a step back before you can move forward, but it can work.

You have to cut back in smaller ways too. When it comes right down to it, cable or satellite television is a luxury. Internet is a luxury. Phone I wouldn’t do without personally, but restrict it to a single, affordable line and don’t overdo any calling that costs extra.

Quit eating out every day. So many people waste tons of money every day eating lunch out. Sometimes they even have leftover food from the previous night’s dinner wasting away at home. Take advantage of your leftovers and bring your lunch. This one move can save you several dollars daily, depending on how much you spend on lunches.

Work out a budgeting system. The envelope system is a classic, and there’s even an electronic version called Mvelopes Personal for those who prefer to handle everything on their computer. Figure it out and stick to it!

Changing your lifestyle is never fun. But sometimes that’s what it takes to regain control of your life overall.

Technorati Tags: money problems, lifestyle, paying off bills, debt, overwhelmed

Credit cards are a near necessity these days, and they’re much too easily abused. Wise use of them means that they’ll make your life a little easier and you won’t regret what you’ve spent your money on.

How do you use credit wisely?

The first thing to remember is to be honest with yourself about how you’re using it. If you’re going overboard and using your credit cards to hide the truth from yourself it’s all too easy to end up in a financial hole that’s near impossible to get out of.

Most important in being honest about where you are financially and especially with credit is to look at the numbers. Are you really where you think you are?

Too often the answer is no, you aren’t. There’s something you forgot when you decided that things were going well. But if things are going nicely, it’s a great feeling to know that you were right about your situation.

The second thing to remember is to not go overboard. Even if you have the credit, do you really need to buy everything you think you want? Saving and investing is often a much better plan for the long term than spending freely.

The third thing to remember is to not make excuses for what you spend. When money is tight it’s easy to dismiss running up the credit cards because of holidays and birthdays. If you can’t afford to spend the money, perhaps you should cut back. Other people will generally understand.

The fourth thing is to make sure you are getting the best possible rates on any credit cards or other debts you’re carrying. There’s no point in paying more for the money you owe than you need to.

Make sure your interest rates haven’t been climbing for no good reason. Credit card companies do sometimes increase rates without what you would think of as a real reason. If your rates are going up for no reason, and the company won’t lower them, remember that there are plenty of options out there. Remind the company of that too, and be prepared to follow up and find someone who will offer more reasonable terms.

Finally, know your own weaknesses. Do you fall for impulse purchases often? Do you just love spending money? Do you love to eat out?

If you know where your worst spending habits are, you can address them. Find ways to keep from spending excessively in those areas that really don’t work well for you.

Set a budget for those things you don’t want to give up on completely. It’s often harder to give something up completely than it is to find a way to enjoy it in moderation. There should be some room for fun in most budgets.

Technorati Tags: using credit wisely, credit, debt, budget, budgeting, personal finance

The entire point of having a rewards card is to get paid for what you would spend anyhow. These aren’t the right choice for everyone. For example, if you tend to carry a balance and the rewards card carries a higher interest rate than a plain credit card, you may be best off with the plain one.

But when you have the rewards available to you, you may as well make the most of them. How can you do that?

1. Choose the right rewards card.

What are your shopping habits? Many cards give higher rewards for certain types of purchases. If this corresponds well to your own spending habits, you’ll earn more.

For example, if you telecommute or have a very short drive to work, and do little other driving, a gas rewards card probably won’t benefit you as much as one that pays you back on other types of purchases. But if you have to drive a lot, this type makes a lot more sense than others may.

2. Drop any with an annual fee.

There are plenty of no annual fee rewards credit cards out there. If you’re paying to have one, you are probably losing out on a lot of what you would otherwise be getting from it.

Think about how much you would have to spend to cover a $50 annual fee. It’s about $1000. Why lose that much of your shopping power?

3. Use it as much as possible while paying the balance off.

If you can keep the balance of the card paid off, there’s no reason to not earn rewards on the money you have to spend anyhow. Many bills can be paid on credit cards, and of course regular purchases such as clothes and groceries can go on them too.

4. Don’t spend just to earn points.

Spending money because you like earning points or rewards is a good way for things to get out of control. Think about what you really need, and don’t forget that saving money for the long term is important. There are no good reasons to spend just to see your points go up on your rewards credit card.

5. Know the terms.

Sometimes the percentage rate you get back changes in 6 months to a year. In other words, the most advantageous rewards credit card now may be different when the terms change. Keep up with what the credit card company is giving you.

Technorati Tags: rewards cards, credit cards, credit card terms