As a teenager, i was always careful with my money and having worked since the age of 16, had built up a healthy bank balance and an excellent credit rating. At the time, I had a strong work ethic and was very reluctant to spend money unnecessarily, but when my 18th birthday arrived, so with it did the offers for ‘credit’ and although they were all ignored at first, my naive self soon became drawn in by their fancy spiel and ‘too good to be true’ offers.
I remember the first time i got a credit card…I suddenly felt all grown up, like i was invincible or something. I thought i had the mindset to use and manage the credit card properly, using it only in emergencies or for essential purchases, but it’s amazing how that tiny piece of plastic can dupe you in to believing you’ve got all the ‘free’ money in the world. At first i paid religiously,settling my account in full each month, but there soon came a point when even the minimum repayments were out of my budget.
I went credit crazy and before i knew it, i was living out of my overdraft, i’d maxed out my credit cards, taken out a loan and racked myself up a huge amount of debt.
That was all a very long time ago and though i learnt from my mistakes and am now 100% debt free, my frivolous ways badly affected my credit rating and it took years of hard work, scrimping and scraving to pay it all off. So if i could offer some firm words of advice to my 18-year-old self, it would be this:
*Do not ignore your mother’s advice or go behind her back when she warns you about the hidden dangers associated with having credit cards. It’s not worth the earache and believe it or not, she IS always right. (Love you mum!)
* Yes, credit cards can be a handy way to borrow money if you use them wisely and manage them correctly, but get it wrong and you could find your debts spiralling out of control. Research the market and use a specialist site to compare credit cards before applying so you can work out what’s the right option for you.
* Do not buy that dress, the designer handbag and those new shoes on your credit card just because you can, they’re not worthwhile or value for money all the time they’re hanging in the wardrobe unworn and looking pretty.
*Do not fall in to the ‘late payment’ or ‘minimum payment’ trap. Set up a direct debit and pay your balance off in full each month to avoid interest being charged on all of your purchases.
* If you successfully pay your credit card bill off in full every month then consider choosing a credit card with rewards instead of a standard one as you’ll be rewarded for spending money that you would have spent any way. You could use your points to buy that must-have gadget you’ve been so desperate for or exchange them for shopping vouchers to purchase that dress, the designer handbag and those new shoes you wisely chose NOT to put on your credit card. You could even use them to treat yourself to a relaxing spa day or put them towards a trip abroad.
*Keep within your credit limits and don’t live beyond your means. Alcohol, cigarettes, excessive nights out and shopping sprees are not and i repeat ARE NOT essential or important purchases.
I wish i’d known then what i know now and listened to my mum when she advised me against having credit. Although i don’t intend on ever getting a credit card again, as a parent myself now, i can at least pass on my experiences and some valuable advice to my boys in the hope that it’ll teach them to be more responsible and wise with their money.