My son AJ just got his first credit card.

A mix of emotions washed over me when he told me about it.

Pride.

Fear.

The feeling of pride came on initially because in spite of what ol' what's his name says I believe it's important to have a good credit score. I mean really, how is someone supposed to save up $250,000 to buy their first home?  Even if they could find something for $50,000, how long would that take? You'd have to be making a heck of a lot of money to do something like that.

Plus I've read that auto insurance companies check your credit report and some companies review your credit report when deciding whether they want to hire you (in looking for places to link to I found that both these concerns are not completely true).

ADDED: Okay, here's a real life reason why you may want to establish credit with the credit bureaus.  My mother needs a current statement from Social Security in order to complete her state income taxes.  That should be really simple because it's possible to sign up with Social Security online now. But not for my mother.  She called and talked to them while I listened in. The reason:  Social Security can't verify who she is because she doesn't have enough credit information to be verified at the credit bureaus.  The only way she can get anything updated, or sign up for an account online is to go into the office in person. What a hassle. So… I guess you really don't HAVE to have credit established, but in my opinion, it's just going to make your life more difficult if you don't.

And so, my son having his first credit card made me feel proud. Especially since he qualified without starting with a secured card!

Fear quickly followed because I believe these companies are predatory in nature. Newly divorced and living on welfare in 1992, I was stunned at the number of credit card offers that arrived in my mailbox.  I was a single mother with an old vehicle which started to break down a lot. Car repairs were definitely a part of my original credit card debt.

I truly believe that people who are barely making it, living paycheck to paycheck – or worse yet on welfare, really need to steer clear of credit cards.  It's too tempting, too easy to go deep into debt.

I believe that most people have good intentions.  They'll only use the card for an emergency.  But when you are living from paycheck to paycheck and don't have an emergency fund, those emergencies can add up fast.

Maybe you have an old car that keeps breaking down.  Or maybe you don't have dental insurance and you get a horrible toothache.  Before you know it, you're paying the minimums on the cards and you can barely afford the minimum.

I've been there, done that. As soon as the payment is made and you have a few dollars available on the card you're buying something you absolutely need. And I'm not saying that facetiously, I mean seriously. For example, my sister. Her health and well being depends on a litany of herbs and vitamins.  She can become bedridden without these supplements.  She struggles to make ends meet each month and sometimes she ends up putting these supplements on a credit card, which is already at its limit. Of course that's the time the credit card companies graciously raise the limit. Come on, credit card companies!  If a person was struggling to manage their credit card at $2000, do you really think you are doing them any favors to give them an additional $2000?

In my son's case, he has an old car that he loves – which keeps breaking down. Since moving out, he's depended on his father to fix anything that's gone wrong. Pretty much free of charge. With a shiny new credit card, he might become tempted to take the car to a mechanic closer to where he lives. I hope not.

When he was at the bank getting him signed up for the credit card, he told the banker, “My mom has given me some advice, but I'd like to hear what you recommend.”

The first thing the banker asked was how much driving does he do?  He suggested using the card for buying gasoline and paying it off in full each month.  He gave him some other advice and suggestions to which my son replied, “That's almost exactly what my mom advised!”

The banker asked my son what does your mother do and he told him she's a personal finance blogger. 🙂 Then I was back to feeling proud.

I just know that having a credit card changes the way you think about your money and finances. When you don't have a credit card, you know your choices are limited. If you are out of gasoline and need to get to work that day, you scrounge up enough change to take the bus, or you call one of your coworkers to carpool.  Or maybe you become more resourceful and gather up all your aluminum cans to turn in for a few dollars. When you have a credit card, it's so easy to buy gas even if you may not have enough money to pay that excess later.   If you're out of money for food, you're out of money for food.  You eat what you've got on hand and make a big pot of soup out of what you find in the freezer or you scrounge up enough change to buy a bag of pinto beans and eat those for a few days.  Not if you have a credit card. You probably don't go hog wild and buy a ton of groceries, but just spending $10 or $20 here and there… it all adds up.

Now if you have plenty of money coming in, credit cards can work to your advantage.  Find one that gives you miles to fly or cash back on everything you buy.  It's kind of fun arbitraging credit cards and using them to your advantage.

Only time will tell if my son will be wise with his new credit card. The banker suggested he work with this one and then apply for another in six months, and then another, until he has at least three.  Again I say, if you have enough money to play with credit cards, use them as a tool, otherwise, it's best to steer clear.

My advice in bullet points:

• Do not rely on credit cards for emergencies, build an emergency fund for emergencies
• Pay the balance in full every month
• If you happen to get a late fee, you can usually get that refunded the first time it happens
• Use the card as a tool to earn points or cash back

Please tell me in the comments what is your advice when it comes to credit cards for new users?

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