Mom’s advice on credit cards

credit-card-calculator-image.pngBy Jasper Smith, GTA Instructor

My last GTA group was especially curious about how the financial world works. Most of the students were aware of needing to have good credit at some point in life, so I shared how my mother explained credit to me. It was JUST this simple:
  1. Use your card to buy things you’re already paying for on the regular (for me…gas in my car and my weekly dinner with my teammates) then put the card away. When you get the bill, pay off the balance in full.
  2. Interest rates will NEVER apply to you if you never carry a balance month over month. This helped debunk the idea that interest rates are the most important thing to consider when searching for a credit card. I badgered my mom about this, but again, she emphasized that paying off your balance in full is the way to go.
  3. “Maxing out” your card isn’t a bad thing, if you can pay off the bill in full the following month. This may look strange from an activity standpoint, but all you’re doing is honoring your contract. Using the bank’s money and paying back. No harm, no foul.
  4. Don’t spend money you don’t have and you’ll never get into credit card trouble.
That was it….and it was a 10 minute conversation. Of course I tell the story WAY better in person, so you should sign up for the next GTA class!