6 lessons I’d tell my younger self about credit cards
Editor’s note: This is a recurring post, regularly updated with new information and offers.
Some people collect stamps, others collect trading cards or coins. But if you’re like many of us at TPG, you likely collect credit cards.
With 10 credit cards in my wallet, chances are I have more credit experience than the average 20-something.
I’m proud to say that I have never missed a payment while juggling nearly a dozen credit cards. In turn, my credit cards have helped me earn thousands of points and miles for travel to places far and wide — all while building up an excellent credit score.
Based on what I know now, here are the six lessons about credit I would have liked to tell my younger self.
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There’s a quote attributed to Norman Vincent Peale: “Any action is better than no action at all.” This principle applies to various facets of life, but it especially rings true for credit newbies.
For most of us, your first card probably won't be The Platinum Card® from American Express. Not only does this luxury travel card come with a $895 annual fee (see rates and fees), but it also requires a good to excellent credit score to qualify.
To be approved for a premium card like the Amex Platinum, you’ll need sufficient credit history to prove to issuers that you can make monthly payments. That’s why developing a credit strategy as soon as possible is important — even if you’re not applying for a premium card.
I started my credit journey on my 18th birthday. As a present to myself, I applied for a student credit card.
While it did not come with all the bells and whistles of my current cards (some of which carry $500-plus annual fees), it taught me invaluable lessons on managing my credit and mastering the art of financial responsibility.
Ultimately, your first card should have no annual fee on your first card, which means it will be limited in perks. That’s expected, though, since the first year is about building up your credit portfolio.
Related: From credit newbie to credit wizard: Here’s a 5-year strategy for rewards cards
Follow two rules
You don’t need to be a credit expert to apply for and manage your first credit card, though you should know what you’re signing up for. If you take away anything from this guide, remember these two rules:
- Pay your monthly balance on time and in full — every month.
- Never charge more than what you can afford.
Whether this means you set up automatic payments, create weekly reminders to check your account balance or use your card only for essential expenses, abiding by these principles will ensure that you keep your credit in tip-top shape.
Opening a line of credit comes with a ton of responsibility, but these two simple rules will help you avoid interest charges and late fees. They’ll also improve your credit score over time, bringing me to my next point.
Related: TPG’s 10 commandments of credit card rewards
Avoid misinformation
I grew up thinking that credit cards are evil and issuers are here to prey on innocent consumers to boost profit margins. Sound familiar?
Related: Why Dave Ramsey is wrong about credit cards
There is a lot of misinformation and incorrect assumptions about credit cards. Many of us were taught that debit cards are a smarter financial choice than credit cards; in many cases, that couldn’t be further from the truth.
Fortunately, we’re here to debunk some of the most common credit card myths:
- Does having many credit cards hurt your credit score?
- Are cards a surefire way to get into debt?
- Does your income impact your credit score?
- Is a debit card better for your credit history?
Take time to research what your credit score means and why it’s so important — and then take steps to keep it as high as possible.
Related: Why you should have multiple credit cards
Shop around
For most beginners, opening a credit card with a bank where you already hold a checking or savings account is easiest. For me, that was absolutely the case. I opened a student card with Wells Fargo because I didn’t know what my other options were.
Of course, it’s nice to have your credit card and general banking statement streamlined into one account — a good option for those who don’t want to manage multiple logins.
But I’d advise my younger self to shop around. If you’re studying, student credit cards are a great place to start — and the options have drastically improved over the years.
Related: My experience of getting my first student credit card — and which credit card I want next
If I could do it all over again, I would open a student credit card with Capital One or Discover. Here are my top recommendations:
- Capital One Savor Student Cash Rewards Credit Card
- Capital One Quicksilver Student Cash Rewards Credit Card
- Discover it Student Cash Back
The best part of any of these cards is that there’s no minimum to redeem your rewards (even if it’s just $10 cash back to cover a meal at Chipotle), which would have been a game changer as a college student.
Related: The best credit cards for college students
The information for the Discover it Student Cash Back has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Avoid foreign transaction fees
While paying your bills in full and on time can avoid interest charges and late fees, other fees are associated with credit cards. One of the most common — especially on student cards and many no-annual-fee cards — is swiping them outside the U.S.
I didn’t know about foreign transaction fees while studying abroad in Paris, which cost me hundreds of dollars. Both my debit and credit cards charged a 3% foreign transaction fee on every purchase — and you can only imagine how much that starts to add up over time.
If you’re traveling internationally, you can avoid these pesky charges by opening a card that waives foreign transaction fees. The Capital One student cards mentioned above waive these fees. Also, check out our guide for the best cards with no foreign transaction fees.
Related: 10 tips to save on overseas ATM withdrawals
Earn points and miles
Once you master the fundamentals of credit, it’s time to expand your horizons.
Whether for spring break or summer vacations, points and miles can unlock hundreds — if not thousands — of dollars in “free” travel.
Eventually, it became time to put my cash-back card in my (figurative) sock drawer and apply for my first travel credit card.
I wish I had applied for my Chase Sapphire Preferred® Card (see rates and fees) sooner; it’s truly one of the best cards for earning and redeeming points for travel. It comes with a $95 annual fee, a generous sign-up bonus, terrific earning rates and other benefits to boot. Read our full review for more information on this great card.
Combining everyday purchases and travel spending on a card like the Sapphire Preferred can help you accrue thousands of points and miles annually.
Related: How to redeem Chase Ultimate Rewards points for maximum value
When you’re ready to up your rewards game, you should probably hold onto that first credit card you opened — especially if it has no annual fee. Canceling a card can have a detrimental impact on your credit score. You also should charge something small on the card every few months to prevent the issuer from preemptively closing your account due to inactivity.
Bottom line
When it comes to credit cards, you’ll hear all sorts of conflicting advice from your friends and family. As I gained firsthand experience with my credit cards, I quickly learned many lessons that changed my perspective on money.
By treating credit cards as a tool to improve my finances, I’ve been able to reap all the benefits. I hope you can, too.
Related: TPG’s guide to getting started with points, miles and credit cards
For rates and fees of the Amex Platinum, click here.
TPG featured card
Rewards
| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 3X | Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com. |
| 2X | Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com. |
| 1X | Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases. |
Intro offer
Annual Fee
Recommended Credit
Why We Chose It
There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.
Rewards Rate
| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 3X | Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com. |
| 2X | Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com. |
| 1X | Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases. |
Intro Offer
You may be eligible for as high as 100,000 Membership Rewards® Points after spending $6,000 in eligible purchases on your new Card in your first 6 months of Membership. Welcome offers vary and you may not be eligible for an offer.As High As 100,000 points. Find Out Your Offer.Annual Fee
$325Recommended Credit
Credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.Excellent to Good
Why We Chose It
There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.