Kids Guide to Credit Cards

Students - Using Credit Cards Responsibly?

What are credit cards?

Credit cards are a way to buy things without using paper money. They are plastic cards that fit into your wallet. To get a credit card you would apply to your bank. The bank looks to see if you have a good record with bill collectors. If you pay your bills on time and you do not have too many bills, the bank will give you a credit card. In return, you promise to pay back the money . You can pay back a little every month. If it is your first account, you may get a credit card for anywhere from $500.00 to $2000.

What companies issue credit cards?

There are several credit card companies. The most popular companies are VISA, Mastercard, Discover and American Express. Each of these companies issues their own card.

How to Use a Credit Card

When you receive your credit card, you may use it the same as you would use cash. When you want to buy something, you would go to the store, pick your item and then go to the checkout and give your card to the cashier. She would run the card through a credit card machine. The machine notifies your bank that you are using the credit card. The bank tells the credit card machine if you have enough money to pay for it. If you do, the machine prints out a receipt and the cashier puts your items into a bag and gives them to you.

When can you get your own credit card?

You can get your own credit card after you start working and can prove that you pay your bills on time. You have to have a job so that you can pay your bill on time. This means that you have to buy something and make payments on it every week or every month. For example, you can buy a couch and put in on layaway. This means that you pay an amount weekly to the furniture store until you owe no more money on it. This is called esablishing credit.

Photo by Gracie Stinson

You should not get a credit card if you do not have a job. If you don't have a job, you will not be able to pay your bill and then you will have bad credit. When this happens, very few companies will allow you to buy things on credit and you may lose your credit card because you promised to pay the money back.

Photo by Turtlehawk

Many students apply for credit cards and get them while they are going to college. If you do this, make sure you can pay the bill every month. Many students have received credit cards and have charged thousands of dollars in goods. Then they cannot or do not pay the bill. Some students do not understand that they are damaging their credit rating. When they leave school, they will not be able to buy a car or a house because of the bad credit.

Photo by Claudio

It is a privilege to have a credit card. So, if you are going to apply for a credit card, make sure you have a job and can pay the bill.

For parents who want to know more about managing their money here is a website with useful information and tips on saving money. I invite parents to join and encourage their children.

http://www.twittercounter.com/gelise1

Website by Gail Cavanaugh's Business Solutions

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