It may not seem like it, but it is possible go to through life without using a credit card. That being said, when used responsibly, credit cards offer numerous advantages over other payment methods. They're convenient, they protect you against fraud and theft, and they offer cash back and other rewards. They can also help you build the credit history you'll need if you want to borrow money to buy a house or a car. If you think paying with plastic might be the way to go, here are some points to consider in deciding when to get that first card and why.
High SchoolWhy you shouldn't wait:"Credit cards are a reality," says Anisha Sekar, VP of Credit and Debit Products at the card comparison website NerdWallet.com. "By introducing the idea of a line of credit early on, parents can teach their kids responsible card use in a safe environment," she says.
A credit card shouldn't be a high schooler's introduction to personal financial management, however.
"I'd recommend opening a youth checking account when the child is in middle school, so that he can get into the habit of balancing the checkbook and using plastic, and also because debit cards are safer than cash," Sekar advises.
"From a checking account, a reasonably mature child could open a low-limit credit card, co-signed by a parent, when he is 16 or 17."
"Having your child use a credit card for one or two years before he leaves for college allows you to teach him responsible use while you're still available to guide him," she says.
Why you should wait:High schoolers could succumb to the same tendency that adults have to spend more on a credit card than they can pay back.
"A parent can guard against this, however, by setting a low credit limit on the card and reviewing each monthly statement with the child," Sekar says.
This advice assumes that parents are responsible users of credit.
"Credit cards can quickly turn into destructive financial products when parents fail to properly teach their children how to use them," says Justine Rivero, a credit advisor at CreditKarma.com.
"While parents might have the greatest intentions of giving their children a convenient way to spend, more often than not, parents won't step them through how to properly use a credit card: to spend conservatively, watch their credit use and, most importantly, pay their bill on time and in full," she says.
Rivero also points out that parents may not teach their children how credit card use affects their credit score or why their credit score matters. She says young consumers may see a credit card as an easy way to spend money, and not as a financial tool to be responsibly managed.
CollegeWhy you shouldn't wait:If you don't have a credit history yet, the sooner you establish one, the better.
"Having a credit card allows kids to build up their credit history and score. This will be immensely helpful when they apply for their own credit cards, student loans, mortgages, and even jobs and apartments," says Sekar. "There are a number of student credit cards, almost all of which have no annual fee," she adds.
Sekar thinks one of the best cards currently available is the Citi Forward card for college students, which has generous cash-back rewards on textbooks and other purchases, and offers incentives to encourage responsible use. She also likes the Capital One Cash card for its 1.5% rewards on all purchases.
Neither card has an annual fee.
Why you should wait:Rivero says she would recommend giving young consumers a credit card in college, when they are primed to learn how to manage their money and build credit.
A debit card linked to a parent's checking account might be a good first step, though.
"Most student cards have high interest rates, so before you hand plastic over to your child, be sure to explain the expensive consequences of charging more than they can afford to pay off at the end of the month," Rivero says. "Giving your child a credit card is an important opportunity to teach your child smart financial basics, so start it off on the right foot."
In addition to high interest rates, parents can't easily supervise their children's credit card spending habits when they're away at college, so it might be a bad place for them to experiment with credit for the first time.
Wouldn't it be worse to wait until after graduation? Maybe. But in college, expenses are constant, while income is irregular or nonexistent.
College students can find it difficult to manage their irregular cash flow to pay off a credit card bill on time. Paying with cash or debit will keep them out of trouble. Starting out adult life with high-interest consumer debt puts recent grads at a major disadvantage.
Recent College GraduateWhy you shouldn't wait:
Still don't have a credit history? Getting a credit card is an easy way to establish one.
If you don't like the idea of using credit, you don't have to make the card part of your regular spending habits. You can use it to make one automatic bill payment per month and set up a second automatic payment to pay off your credit card bill. Yes, this is an unnecessarily complicated way to pay a bill, but it's an easy way to establish a credit history.
It's also a good way to build a high credit score. By making one small charge a month, you keep your credit utilization ratio low. Your credit score will benefit when the amount of credit you use is low compared to your credit limit. Using your credit card in this way also establishes you as someone who pays the bills on time, which is another important component of a high credit score.
Even if you don't have any plans to take out a mortgage, an auto loan or another form of debt for which a good credit history is essential, your plans could change one day. Think of establishing your credit history as a free insurance policy that only requires a small investment of your time.
Why you should wait:If you know you won't be able to resist the temptation to spend yourself into debt, don't take out a credit card. Yes, it will be more difficult to lease an apartment, take out a mortgage or secure a loan to buy a car. But at least you won't have an unmanageable mountain of credit card debt. Credit card companies aren't going anywhere. You can always change your mind later and decide that you're financially responsible enough to start managing credit.
The Bottom LineCredit cards are ubiquitous, and for many people, the benefits of using them outweigh the drawbacks. Learning how to use credit responsibly early in life can set you up for decades of convenient spending, rewards and a high credit score that will let you borrow money at the lowest available interest rates.
But no convenience or reward is likely to outweigh the drawbacks of carrying around high-interest debt, so if you don't think you or your child is ready for a credit card yet, it's OK to steer clear of credit cards for as long as you need to.