Young and trying to learn about money

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Shoobie

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Dec 30, 2005
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Reno, NV
Hey everyone. I'm 17 years old, and I'm trying to learn a little about money and responsibility. I'm a senior in high school, and I'll be living at home when I go to college. I have a part-time job (I'm a shift supervisor at a Dairy Queen) making $8.50/hr working about 25 hrs/week. After some careless spending and some time off from work to concentrate on school, my summer savings were depleted. I'm back up to $1300; I'm saving for a roadtrip with my girlfriend this summer. I don't pay my cell phone bill ($70) and my dad doesn't always collect the car insurance money ($250/6mo). I do, however, buy my own clothes, pay for school stuff, and I bought a mini-fridge for my room so I can keep my own food/beverages.

My question is this: as a minor, should I even bother jumping through hoops trying to get a debit/credit card? I asked my bank (Bank of America), and they told me I would need to set up a joint account with a parent (this confuses me a bit, because my mother's name is on my minor's savings account anyway).

I would consider myself responsible enough for a card. One reason debit entices me is the ability to carry less cash. I'm limited to three free ATM transactions per month, and sometimes I don't pull enough out of my paycheck to last me when things come up (these aren't big things, mind you; just things like taking my girlfriend to lunch, or a good sale on auto parts). Another reason is getting an early start on building good credit. I don't know if this point is moot (as I'll be 18 in June anyway). One of my managers also told me that there are incentives to be had from using credit cards; he said he recieves a certain percentage of his purchases back at the end of the year (or something like that). Obviously the opportuinities for a 17-year-old part time worker/student and a 30-something business owner are far different.

I know many of the members on this fine board are more mature and knowledgeable that I, so I ask to be pointed in the right direction.
 
I'm 24. I got a credit card at 21. I'm a convenience user: I use my credit cards instead of cash, and ALWAYS, ALWAYS pay off the entire balance at the end of the month. I've never paid a penny in interest. Last year I had built up enough credit to upgrade to a rebate card, which gives me 1% cash back for everything I buy. I like credit cards better than debit cards. While neither of them cost me a penny (except at Taco Bell, those cheap screws), a credit card allows me to defer payment on purchases for several weeks, and I can earn interest on my savings during that time. Debit cards take the money out of one's account instantly, so no interest is earned.

I highly recommend getting a credit card, but with one qualifier: treat it exactly the same as you would treat cash. Pay your balance in full every month, and don't pay interest. If one can't afford to pay cash for something, one can't afford it. As long as you remember that, then you'll be able to use your card for convenience and build a good credit history at the same time.

You may want to wait until you're 18, just to avoid all the hassles of being a minor. And try to find a really good bank/credit union. A financial institution that doesn't charge for every little thing is nice. I've got a great one, and it makes things much easier! Good luck!
 
I would caution that the easier it is to access your money, the easier it is to blow it on an impulse buy. Debit cards are less of a problem since you need to have the money you're spending, while credit cards will let you go over that to whatever the card limit is. That could lead to trouble if you can't keep up with the interest payments. Not so bad if mom/dad can back you up if you go a little overboard with spending, though I don't think that's a healthy trend to start.

But that's worst case.
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If you're really concerned that will happen, tell your folks they can cut up your card in a year (or whatever) if they feel you're going crazy with it. But if your posts here are any indication, you're far more mature than most your age, or any age. Spelling, punctuation, proper paragraphs... I'm impressed!
grin.gif
If you feel ready for it, go ahead.
 
Thanks Palut! That's the kind of response I was looking for. The point of a credit card wouldn't be to buy things I can't afford. I wanted to stress that in my initial post, but I couldn't find the right words.

The reason I'd like to get one now is that I will be roadtripping before I turn 18. My girlfriend will be 18, so we will have a way to rent motel rooms, but I hate being dependent.

How would you suggest I go about finding a good bank? The reason I chose BofA is simply because my parents bank there. As of now, all I need is someone to hold my money, and hardly any money (a few thousand) at that.
 
I'd rather have a debit card in my wallet than cash.

Never had a credit card...don't beleive in spending what I don't have, unless it's a home or investment loan (and the latter is pretty much not on either).

As to banks, the one that I'm with offeres a 0.01% interest debit card, linked to a 5% interest internet savings account.

I can transfer between the two, but if my debit card goes AWOL, then only the balance of THAT card can be attacked.
 
You can get a prepaid credit card lots of places like drugstores and walmart. These are good for online purchases, etc.

Your auto insurance premium is awesome for someone of your age in most parts of the country. Don't get any tickets.
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Credit card companies charge retailers 2% or so as a "kickback" so some are starting to share the wealth and give 1% to the card user. There are some debit cards with MC/Visa logos (follow me?) that, if you sign the slip, gives your bank the kickback. One bank near me (Norway Savings bank) gives a 1% kickback to the user.

A debit card comes directly out of your account. Simple, but you've got to make every little entry in your checkbook register. As a minor your bank will most likely not offer you a line of credit without a cosigner (parent). This would be "overdraft protection" or simply a credit card.

If you have a good relationship with your bank you can probably get a small ($500) line of credit attached to your present account when you turn 18.

Eventually when you get all settled you should get a seperate credit card that you can pay online. Then if a merchant gyps you you can not pay that portion of your bill. More convenient fighting position as you aren't fighting to get your money back.
 
The fact that you are even asking these questions shows a great deal of maturity and sense.
Building up your credit will get you loans for less interest later on [car, home, etc...].
Get a credit card and debit card, but pay off your card every month.
Get a couple of credit cards, and your rating will be higher after you make a few purchases and pay them off than just having one card.
 
If you want to learn more about money, investing, credit, etc. I'd recommend two radio hosts. Bruce Williams (who I've listened to for 25 years) is the best common sense money/life advisor I've ever heard because he's done pretty much everything and made pretty much every mistake that can be made. Bob Brinker has the best investing talk show out there. Bob might get a bit dull because investing is pretty much the only thing he talks about, but listen and learn.

Start investing NOW, even if it's just a little bit. If you invest a little now it has 50 years to grow and will be worth a fortune when you retire. If you wait until your 40 you'll have to invest much much more and it won't be worth nearly as much when you retire. Compounding is the greatest invention of mankind! :)

Wayne
 
As for credit cards, things will change dramatically once you start college. College kids are the #1 focus of credit card issuers these days. Everyone from AMEX and Citibank on down is pursuing college students. Obtaining credit as a college student will be so easy, it'll be very tempting to sign up for a new card every time you see a sign up table.

Yes, you need at least one credit card. BofA is as good as any issuer. For a selection of issuers and offers, check out www.cardweb.com

CardWeb has a list of secured credit card issuers to choose from. They'll issue you a normal credit card if you open a savings-type account with them. So you deposit, say, $500 into an account and they'll issue you a credit card with a $500 limit.

Good luck!!
 
Absolutely forget about credit cards right now. Don't be another sucker. Sure you can pay them off 100%, and that's OK I guess, but you have plenty of time for debt and credit scores and real foolishness. I fail to see the rush,

Now as for advice - wwilson already posted for me. :)GREAT advice!

You might find this helpful:
types of wealth

You are very savvy to ask these questions at 17!!!
 
I didn't have a checking acct until I was 26... didn't have a major credit card until I was 31. I bought property when I was 29 with credit history only from store credit cards. These cards were rarely used, but showed up as paid-in-full on my credit report. Of course, things were different back in the 80s.

Plus, I didn't have a girlfriend at 17 and lived with my parents for quite a while, allowing me to save up. For my whole life I always spent less than I made.

I guess my point is that you may want to keep your finances simple. To this day I avoid anything that charges a fee... and that includes ATM cards. Otherwise it sounds like you have financial discipline.
 
Start your Roth IRA right now. Even at $50 per month you will have a ton of money at retirement.

With compound interest time is your friend. You've got lots of time, so you will have the full effect of compounding.

Couple of books to read.

The richest man in babylon by George S. Clason
The total money makeover by Dave Ramsey.

Start with those.

Really the biggest trouble for anyone is not making the money, but living below ones means. No one in the world can afford everything they want, so they have to have self control and only get some of the things they want, but must also save for the future, and for other necessities.
 
Don't get into the credit card game. Really that is what it's about. Credit card companies are snakes and they will bite. You can play with them for a long long time and not get bit, but one day, look out.

Don't worry about your FICO score or your Credit Score, Credit is for losers.

What if you had $100K in the bank by the time your 25. Do you think you need to "borrow" money from anyone?? Nope.

As far as buying a house you can do that without building credit as well. Basically if you can show that you have had a steady job for 2 years, and have paid rent and utilities and such, a bank should be able to lend you money for a house, you might have to find a bank that doesn't just look at the FICO score but actually looks at your personal history instead, they are out there but you might have to check around.

Secondly to buy a house, you will need at least 20% to put down and a 15 year fixed is the best (least interest) which you should strive to pay off sooner than later.
If you play your cards right and stay debt free you could easily be retired by the time your 50, or sooner.

But if you get into that credit trap, plan on working for the rest of your life.
 
Get Quicken or MS money and get in the habit of tracking your spending and creating a budget.

Will pay dividends throughout your life. It will also help you see where you are spending your money and help you manage all kinds of things from car loans, credit cards, retirement accounts and many more. Also helps with taxes later.

As the a previous poster said, open a Roth IRA and put something away as you have time on your side.

In terms of credit cards, if you get one, pay it off every month.
 
Well Dan, then my advice to him is to marry a very, very rich girl with a pre-nup that is going to generously benefit the groom with the bride's assets. Kind of like a dowry fund.

You have to admit Dan, that I gave him the best advice about money, and about marriage for that matter. LOL
 
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