Young Adults and New Credit

Did you know? Starting in February 2010, consumers aged 18-21 will need a parent cosigner or proof of independent income to receive a credit card. Young adults who already have a credit card won't be affected by the new rule.  How should you use it? When you get your first credit card, ask yourself these questions before using it to make a purchase:

• Do I really need it now?
• Will I have enough money to pay off the entire purchase when I receive my monthly statement?
• What is the real cost of this purchase, including fees and interest?

A few pointers for young people seeking credit.

• Know the power of credit.  Creditors look at your credit history as an indication of your future financial behavior.  Using credit wisely builds a good credit history. 
• Read the fine print.  Read your application carefully before signing -- it’s a legally binding contract. Credit card companies are very competitive so interest rates, credit limits, grace periods, annual fees, terms and conditions may vary.
• Pay at least the minimum due on time.  This will help you avoid late fees and a rising annual percentage rate (APR).  To reduce your balance quicker, pay more than the minimum due.