Thursday, 7 February 2008

My first credit card at 22 years old

I just read a post over at JosephSangl.com about his first credit card. It caused me to think when I got my first credit card. I think it was just when I graduated university at a ripe old age of 22. It was a Visa card issued by the State Bank of Victoria (it shows how old I am!)

When I got it, the bank must thought I was a high credit risk and put a $500 dollar limit on it. Even with $500, I really thought I have hit the big money! Back then, and as now, $500 at my disposal was a great responsibility. At 22, I was very conscious of how much is being spend on the card, and paid it all at the end of each month. This pattern of usage occurred for next 10 years. I think the ability of paying off every month has caused me to become complacent in recent years. My spending habits was not kept under control and have lost its way.

My credit card limit increased from $500 to a massive $20,500 over those years, and the card status kept increasing. I even managed to be a platinum card holder. It finally maxed out at $20,500 one day and I knew that credit cards are a real problem. Through hard savings and careful budgeting, we have just managed to pay off the credit cards. We have also reduced our credit limit to something more manageable. Having a $20,500 of credit card debt is something I don't ever want again.

Now that I have a son, I wonder when he will apply for his first credit card. Should I give him a secondary credit card with either my wife or I as the primary card holder? This way, we can teach him that it is a privilege to have a credit card. It is a card that is very powerful that can either cause many financial headaches if not used properly or become a very good financial tool if used correctly.

Any thoughts?

Update: I just came across a great guest article at The Digerati Life along similar lines.

3 comments:

Andy said...

Teaching good financial habits to a young one is done best through the examples you set. If you show you know how to manage expenses with a credit card, he will follow your example.

Also, let him try to apply for a credit card on his own, that in itself is a learning process.

tehnyit said...

That is an extremely good point. Being a good role model is critical to the young one's financial habits.

solvingdebts said...

Hi... first tell me that how did u manage to get out of $20,500 debt...

I also used to have lots of credit card earlier.. but not so much of amount.. what i did i went for a credit card consolidation option from a different agency.

And now I am absolutely free from credit cards debt.