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6 lessons I'd tell my younger self about credit cards

February 18 2022
11 min read
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Some people collect stamps, while others collect trading cards or coins. But if you're like many of us at TPG, it's likely that you collect credit cards.

 

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With 10 credit cards in my wallet, chances are that I have more experience with credit than the average 20-something.

I'm proud to say that I have successfully juggled almost a dozen cards and have never missed a payment. In turn, my credit cards have helped me earn thousands of points and miles on my everyday purchases to travel to places far and wide, all while building up an excellent credit score.

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Based on what I know now, here are the six lessons about credit I would have liked to tell my younger self.

New to The Points Guy? Sign up for our daily newsletter and check out our beginner's guide.

Starting from somewhere is better than not starting at all

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 will most likely not be The Platinum Card® from American Express. Not only does this luxury travel card come with a $695 annual fee (see rates and fees), but it also requires a good to excellent credit score to qualify.

(Photo by Ryan Patterson for The Points Guy)

To get approved for a premium card like the Amex Platinum, you'll need sufficient credit history to prove to issuers that you can make your payments every month. That's why it's important to get started with a credit strategy as soon as possible, even if you're not applying for the most glamorous card from the get-go.

I started my credit journey on my 18th birthday. As a birthday present to myself, I walked over to the Wells Fargo branch on my college campus and 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 $550-plus annual fees), but my very first credit card taught me some invaluable lessons on managing my credit and mastering the art of financial responsibility.

Ultimately, you'll likely want to have no annual fee on your first card, which means it will be limited in perks. But, that's to be expected, since the first year is all about building up your credit portfolio.

Related: From credit newbie to credit wizard: Here’s a 5-year strategy for rewards cards

Follow these two principles of credit

(Photo by Isabelle Raphael/The Points Guy)

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:

  1. Pay your monthly balance on time and in full — every, single month.
  2. 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

There's a lot of misinformation out there

(Photo by Sam Edwards/Getty Images)

I grew up thinking that credit cards are evil and issuers are here to prey on the innocent consumer to boost profit margins.

Sound familiar?

Long story short, 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 — when 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:

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 you possibly can.

Related: Yes, I have 22 credit cards; here’s why

Don't be afraid to shop around

(Photo by John Gribben for The Points Guy)

For most beginners, it's easiest to open a credit card with a bank where you already hold a checking or savings account. For me, that was absolutely the case — I opened my student card with Wells Fargo because I just didn't know what my other options were.

Of course, it's nice to have your credit card and general banking statement streamlined onto 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 in a two- or four-year university, student credit cards are a great place to start, and the options have drastically improved over the years.

If I could do it all over again, I would open a student credit card with Capital One or Chase. Here are my top recommendations:

The best part of any of these aforementioned cards is that there's no minimum to redeem your rewards (even if it's just $10 cash back to cover the cost of Chipotle). That would have been a game-changer as a college student, as my Wells Fargo College Cash Back Card required that I accrue at least $25 in rewards before I could cash them out — not to mention the rewards rate was just 1% cash back on all eligible purchases.

Related: Best first credit cards for beginners in 2022

Avoid foreign transaction fees

Not strategizing about ways to avoid foreign transaction fees cost me during a study abroad stay in Paris. (Photo by Valeria Schettino/Getty Images)

While paying your bills in full and on time can avoid interest charges and late fees, there are a number of other additional costs associated with credit cards. One of the most common — especially on student cards and many no-annual-fee cards — is swiping them outside of the U.S.

I didn't know about foreign transaction fees while studying abroad Paris, something that cost me hundreds of dollars during my time in France. 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 planning on traveling internationally soon, you can avoid these pesky charges by opening a card that waives foreign transaction fees. All of the Capital One student cards mentioned above waive these fees, so be sure to check out our guide for the best cards with no foreign transaction fees.

Related: Top ways to save on overseas ATM withdrawals

Travel rewards cards can help subsidize your travel

One of my favorite Chase Ultimate Rewards redemptions was for Air France business class. (Photo by Stella Shon/The Points Guy)

Once you master the fundamentals of credit, it's time to expand your horizons.

Whether it is 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 that I had applied for my Chase Sapphire Preferred Card sooner, since it's truly one of the best cards for earning and redeeming points for travel. It comes with a $95 annual fee but a big sign-up bonus, terrific earning rates and other benefits to boot:

  • Get 60,000 bonus points after you spend $4,000 in the first three months of account opening, worth $1,200 in travel according to TPG's valuations.
  • Earn 5 points per dollar on Lyft (through March 2022) and travel purchased through Chase Ultimate Rewards; 3 points per dollar on dining, select streaming services and online grocery purchases; 2 points per dollar on all other travel purchases; and 1 point per dollar on all other eligible purchases.
  • Transfer your Chase Ultimate Rewards points at a 1:1 rate to 11 airline and three hotel programs, such as Southwest Rapid Rewards and World of Hyatt.
  • Redeem your Chase Ultimate Rewards points at an elevated rate of 1.25 cents per point (instead of just 1 cent per point) for all travel booked through Chase Ultimate Rewards.

A combination of everyday purchases and travel spending on the Chase Sapphire Preferred can help you accrue thousands of points and miles every year.

Related: How to redeem Chase Ultimate Rewards points for maximum value

Just note that, when you're ready to up your rewards game, you should probably hold on to 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, though you also may want to charge something small a few times a year 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 first-hand 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 of the benefits — and hopefully, you can, too.

Featured photo by (Photo by Orli Friedman/The Points Guy)
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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  • Limited Time Offer: Earn 100,000 Bonus Marriott Bonvoy Points after spending $4,000 in purchases on your new Card in your first 3 months of Card Membership. Offer expires 11/2/22.
  • 6x points at hotels participating in the Marriott Bonvoy® program.
  • 4x points for purchases made at restaurants worldwide, at U.S. gas stations, on wireless telephone services purchased directly from U.S. service providers and on U.S. purchases for shipping.
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Best Marriott card for Business Owners
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
3 / 5
Go to review

Rewards Rate

6X6x points at hotels participating in the Marriott Bonvoy® program.
4X4x points for purchases made at restaurants worldwide, at U.S. gas stations, on wireless telephone services purchased directly from U.S. service providers and on U.S. purchases for shipping.
2X2x points on all other eligible purchases.
  • Intro Offer
    Limited Time Offer: Earn 100,000 Bonus Marriott Bonvoy Points after spending $4,000 in purchases on your new Card in your first 3 months of Card Membership. Offer expires 11/2/22.

    Limited Time Offer: Earn 100,000 points
    75,000 points
  • Annual Fee

    $125
  • Recommended 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.

    670-850
    Excellent/Good

Why We Chose It

The Marriott Bonvoy Business Amex is a stacked card with a rewards rate that will help you earn bonus points on everyday and business-related purchases. You'll earn 15 elite night credits each calendar year, and receive automatic Gold elite status. Finally, the free night award certificate with a redemption level of 35,000 points or less can get you hundreds of dollars in potential value each year.

Pros

  • 6x points on eligible purchases at hotels participating in the Marriott Bonvoy program
  • 4x points at restaurants worldwide, U.S. gas stations, wireless telephone services purchased directly from U.S. service providers and U.S. shipping
  • 2x points on all other eligible purchases
  • Earn a free-night award each card renewal month (up to 35,000 points)
  • Receive 15 elite night credits to jump-start status
  • Transfer Marriott points to 40+ airlines

Cons

  • Airline points transfer ratios are poor
  • Must spend $60,000 in a year for second free-night award
  • Limited Time Offer: Earn 100,000 Bonus Marriott Bonvoy Points after spending $4,000 in purchases on your new Card in your first 3 months of Card Membership. Offer expires 11/2/22.
  • 6x points at hotels participating in the Marriott Bonvoy® program.
  • 4x points for purchases made at restaurants worldwide, at U.S. gas stations, on wireless telephone services purchased directly from U.S. service providers and on U.S. purchases for shipping.
  • 2x points on all other eligible purchases.
  • Receive a 7% discount off standard rates for reservations of standard guest rooms at hotels that participate in the Marriott Bonvoy program when you book directly. Terms and Conditions Apply.
  • Receive 1 Free Night Award every year after your Card renewal month. Plus, earn an additional Free Night Award after you spend $60K in purchases on your Card in a calendar year. Awards can be used for one night (redemption level at or under 35,000 Marriott Bonvoy® points) at hotels participating in Marriott Bonvoy®. Certain hotels have resort fees.
  • Enjoy Complimentary Marriott Bonvoy Gold Elite Status with your Card.
  • Terms apply.
  • See Rates & Fees