6 Smart Credit Card Habits for Youngsters

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When we are young, getting our first credit card can be an exhilarating experience. It’s kind of like our first step into adulthood. But adulting can be difficult! Many of us older peeps can attest to that. There are so many things we would want to tell our younger selves about credit card usage–things that we wish we knew when we were younger. Thankfully, this is our chance.

Here are a few smart and efficient credit card habits that young people should have in order to keep their finances together.

1. Know when to stop – Say no to maxing out!

Having a credit card with a high credit limit might make you feel invincible at times. But you’ve got to make sure that you don’t get carried away! Always make sure you have sufficient money to repay the full amount due. Even if you have sufficient savings to make repayments, if you are getting close to maxing out your card, it’s advisable to stop using it as you may need the extra credit for an emergency.

Credit card purchases will usually be declined if it exceeds your credit limit. You can call the bank to request for a temporary credit limit increase, but you’ll need to take note of the new due dates for repayment. Otherwise, the fees and finance charges will be hefty!

2. But don’t forget to extract the full potential of your card

Know the features and benefits of your credit card like the back of your hand. If you’re using a cashback credit card, always know what are the categories that earn you the most cashback, what are the minimum spends, and if there are any cashback caps. Once you know this, you can maximise your rewards and get the best card for your lifestyle and expenses.

3. Learn when to leave your card at home

If you identify yourself as an impulse shopper, sometimes it’s better to leave your shopping credit card at home. It’s not uncommon for us to be window shopping with friends on weekends, only to be drawn to an item on discount only available with your credit card. If your shopping credit card was left at home, you won’t be tempted to spend money unnecessarily. After all, you were supposed to be window shopping!

4. Use other alternatives such as debit cards or cash

Some of us tend to ‘spend and forget’ when we pay with our credit card. It’s particularly a problem if your bank doesn’t offer a good mobile banking experience to check your balance on the go. For young people that aren’t equipped with the willpower to control their spending yet, it’s advisable to use a debit card or cash as well. That way, you won’t find yourself with a mountain of debt at the end of the month.

5. Track your expenses with financial apps

It’s incredibly important for us to keep a close eye on our expenses. It helps us know if we’re overspending in some areas, or if we’re on track with the budget for the month. These days, tracking expenses is so much simply. There are expense tracking apps to download, or you can use your bank’s mobile app to get a rough gauge of your spending.

We prefer expense tracking apps, as you’ll be able to manually input everything you spend on to get a holistic picture. Banking apps tend to offer a limited view because they cannot track cash expenses or transactions made using another bank’s credit card.

6. Repay your bills on time, and in full

A good repayment behaviour on your card lays the foundation of a decent credit score for the long term. If you consistently miss the deadline of your monthly payment, not only will you incur costly finance charges, your credit score will also take a hit.

In order to make sure you don’t miss the due dates, set a reminder on your phone or initiate a standing instruction on your savings account that will automatically make the payment on the due date.

You should also keep the following things in mind:

  • Read and understand the terms and conditions associated with your credit card.
  • Don’t spend just to get rewards or cash rebates
  • Don’t use your credit card to withdraw cash unless it is a case of emergency.
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