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With growing concern over credit card and debt management in the economy, many are wondering what decisions will be best for their individual needs or may have children or grandchildren wanting to get their own credit cards. While credit cards may carry risks, they can beneficial when used properly. Below are a few simple tips for wise spending… for every stage of life. 

Teens
Are teens too young to carry credit cards? This can be the time to teach kids that credit cards are a convenience, not an extension of income. Kids who learn to use credit cards responsibly in high school are more likely to avoid getting over their head with debt in college.

Credit cards have been increasingly becoming more and more popular among high school students. Teens who do best use their own cards (co-signed by a parent) with a low credit limit and use their own checking accounts to make payments each month. That way, kids learn the connection between credit cards and cash. Parents consistently monitoring and speaking with their children about the choices their teens are making are positive steps to financial independence.

College Students
The average undergraduate is carrying a $2,300 credit card balance, according to a study by Nellie Mae, and more than 83 percent of undergraduates have at least one credit card in their wallets.¹ Consumer advocates have long criticized the credit card industry for marketing easy-to-get, high-interest card offers directly to students. Too often, credit card balances coupled with student loans means that a young person must spend the first decade of his or her adult life struggling to pay massive debts.

The best prevention against that scenario? Parents need to constantly monitor their children's finances. Having one credit card with a very low credit limit that students pay back on time will take care of emergencies and help students begin to establish the good credit rating they'll need when they graduate. After all, they can't get into too much trouble if the most they can charge is $250 or so.

20 to 30-Year-Olds
This is the time when building a stellar credit rating and earning a top credit score are key. Shop for a card with no annual fee and the lowest interest rate possible. Also, look for a card with a good reward program that fits best. Then use it to make sensible purchases that can be paid back immediately or within a couple of months. That way, one begins building the credit score needed for major purchases, such as a house or car, in the future.

Ever considered buying something expensive, such as a new TV or computer, but can't afford it? Don't be tempted to purchase these items with a credit card. It’s still not affordable, and interest will be added to payments on those purchases for months to come.

40 to 50-Year-Olds
This is the time to pay down debt and remove unused cards. Start clearing financial decks to retire debt free and use these high-earning years to fund retirement accounts. Low fixed rate cards are best for those in good credit standing. Consider consolidating debts (those in this age group often accumulate more cards than needed over the years) on one of these cards and get the balance down to zero. Use the money previously spent to pay toward credit cards each month to boost retirement savings. 

Seniors
Retirees are taking on debt faster than any other demographic group. For households with people 65 and older, credit-card debt doubled from 1992 to 2004, to $4,907. For people 75 and older with debt, their average balance shot up 160 percent to $20,234. Much of that credit card spending went toward health care.

For those using credit cards to make monthly ends meet in retirement, it is crucial to take a hard look at the overall financial picture to find a long-term solution. Meeting with an investment professional or retirement advisor may be the answer to solving financial needs.

For information on GECU’s great low rate credit cards, click here. You can also contact our phone loan center at: 513.243.5626 or 888.670.5626 to discuss our programs.

Source: www.bankrate.com, "Credit Card Tips Throughout Life's Stages," Walecia Konrad, February 20, 2007, http://www.bankrate.com/brm/news/financial_literacy/
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¹www.nelliemae.com, "Educating Undergraduates on Using Credit Cards," Marie O'Malley, http://www.nelliemay.com/library/cc_use.html

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