If you haven’t yet thought about having the money talk with your partner, you’re not alone. At this point, money is almost seen as more taboo than sex, politics, or religion. However, it’s no secret that money leads to a lot of heartbreak in relationships. With close to 90% of divorces stemming from money issues or financial infidelity, learning how to talk about finances with your partner, especially early on, is key to the success and longevity of your relationship. From our experience giving financial consultations with couples, we’ve learned that many couples wait to discuss money until they’re about to make a joint financial decision, but we would strongly urge you to have these conversations sooner rather than later. The reason? Imagine this: You’re going to buy a car or a home with your significant other. The lender pulls your credit reports. And that’s when you find out your better half has a credit score of like, 2. (Ever-so-slight exaggeration on the score, but you get the point: that is not the moment you want to find out about your partner’s shoddy credit history.) Or maybe you’re in honeymoon bliss after the wedding and then find out your new partner actually has a huge student loan to pay off or has maxed out his/her credit cards. While this debt may not be your responsibility per se, it will affect the life plans that you may or may not have been diligently keeping in your journal since age 7. Talk about a buzzkill.
So, hopefully, we’ve convinced you that having the money talk is one of the most important (and ongoing) conversations you’ll have with a partner, but now, where to start? Every couple is different, especially because money is a deeply personal and sensitive topic. While there is no one-size-fits-all approach, we’re both in long-term relationships (6+ years) and have been able to navigate the topic successfully so far. Basically, we kind of know what we’re talking about.
The timeline we both followed for our relationships may be a little different for you and your partner, especially based on when you plan to move in together and make joint financial decisions, but this will give you a general overview and questions to consider.
0-6 Months (Or Newly Dating)
Every relationship moves at a different pace, but for both of us, the first six months of our relationships were just about having fun. We didn’t get into the nitty-gritty, like exchanging credit scores or bank balances (chill out, Meredith Blake), but being attentive to details during these beginning stages can tell you a lot about how a person manages money. None of these observations are inherently good or bad, but picking up on habits and behaviors can tell you a lot about a person’s relationship with money without doing a whole interrogation-style line of questioning. Some things to pay attention to:
☆ Does your partner ball out on payday and then live on Top Ramen for the rest of the month?
☆ Does your partner pay for everything with cash or credit cards?
☆ Does your partner say “yes” to every invite, trip, or activity, or do they decline occasionally to focus on other goals?
☆ Does your partner buy a new outfit for every event?
At the beginning of her relationship, Lauren asked her partner a ton of questions about every aspect of his life. Sounds a little intense, but, evidently, it didn’t scare him off. When it came to money, by asking questions about what his childhood was like, what his high school/college jobs were, what scared him about the future, etc., she learned a lot about his approach to money before they had any “official” conversations.
At the beginning of a relationship, you should definitely focus on having fun and getting to know someone, but you can still learn about their approach to money just by paying a little attention.
6 Months-2 Years (Getting Serious)
Around this time, we both started to open up a little more about specifics with our finances. For instance, if you read our previous articles, you’d know we both love to travel, and it was important for us to have partners who enjoyed doing so as well. About a year into their relationship, Lauren and her partner were planning their first international trip as a couple. Lauren’s partner was stressed about booking because he’d been been feeling stretched thin with always agreeing to go to all of the happy hours, dinners, etc. that she wanted to do. This led to them both breaking down and sharing their budgets to figure out what they could each afford to do and how to allocate funds.
This also ties into one of our most important money principles: spend freely on the 2-3 categories that you value most, and cut costs as much as possible on the things that you don’t. This is important in your relationship as well as your personal spending. By sharing our entire budgets with our partners, we learned more specifics, such as each other’s incomes and how much we were paying for student loans, but more importantly, we learned more about what the other person valued spending money on. Learning this helped us cut costs in other areas—like, while we wanted to try all the best happy hour spots in Seattle, our partners didn’t prioritize that. So we learned to start cooking at home with our partners to get that quality time, and Lauren and I still hit up all the happy hours…without the guys.
3 Years (Or Before You Move In Together)
We each moved in with our partners three years into our relationships. We’ve always believed that moving in together should never be about convenience, saving money, or anything other than wanting to start a life together. So, before we each moved in with our S.O.s, we wanted to lay everything about our financial health out on the table.
We made sure that our partners were comfortable with this, then we set a date and made sure to have a great bottle of wine ready to go. Trust us, the money talk can be uncomfortable at first, so you’ll want to make it as fun and relaxing as possible.
During these conversations, we kept track of EVERYTHING that the other person could possibly ask about finances.
Credit Score: If you need a great place to find this information, Credit Karma is our go-to. Many people confuse a credit score with a credit report. You can check your credit score for free and as often as you like, without impacting your score. A credit report is what you can only check for free once a year. If you want to know more about the difference between the two, check out this Hello HENRYs post.
Salary: Obviously, your annual income. This is also a great place to list any bonuses or additional incentives that are part of your total compensation.
Assets: This is where we listed all of our accounts and the balances in each. Checking accounts, savings accounts, 401(k), investments, real estate, etc. Anything that has a value and that you personally own. It’s helpful to break down each asset, as well as include a total. That way you can understand how your partner’s assets are allocated.
Seeing the breakdown can help you to have important conversations, such as whether he/she is risk-averse versus opposed to investing, if they have been saving for retirement, etc. Then you can come up with an approach together.
Debts: In this section, we listed any money that we owed to someone else. Student loans, car loans, medical bills, all credit cards (plus the balance on each). Even if the balance is zero, it’s still helpful to know how many cards your partner has and their overall history on each. For example, you may just have one credit card for emergencies, while your partner is the type to open a new account just to save $10 at Pottery Barn. Again, no judgment on either—it’s just important to understand how you both differ in your approach to credit.
Net Worth: This number is determined by subtracting your total debts from your total assets. Ideally, this number should be positive. If not, you should understand why and be actively working to increase it every month. Net worth is the single most important indicator of your financial health and well-being. So many people assume a person’s income is the most important predictor of their financial future, but this is not the case. Let’s say your partner is making $250K a year but has a negative net worth. There may be valid reasons for the difference; maybe your partner has student loans that resulted in a higher-paying job but will take some time to pay off and get out of the negative, whereas you have no student loans. However, if your partner is simply spending more than they make, you may need to have a bigger conversation about how you can get on the same page and not live beyond your means.
4 Years + Beyond
A year after moving in together, Zach and Lauren bought their first home and have continued to have open, honest conversations about money. They have a finance “meeting” on the calendar every three months, which may seem intense for some, but for them, it has prevented many disagreements about money. During these meetings, they continue updating the same spreadsheet that they used before they moved in together with all of their debts, assets, etc. It’s been really cool to have a log to see how far they have come with their finances over the past two years.
Even if you aren’t in a serious relationship, we would strongly suggest keeping a similar spreadsheet for yourself to track your progress and to easily see which areas you want to focus on!
And that’s pretty much everything you need to know about how to have the money talk with your partner, no matter what stage your relationship is in. The important thing is, once you’ve started the conversation, it’s never truly over. Continue to have honest and open communication to avoid any surprises later on.
Images: Kelly Sikkema / Unsplash, Giphy (4)
Welcome to WTFunds, where we do what nobody else does and… actually talk about money. Ever scrolled through your Instagram feed, wondering how your friends are affording their lifestyles when they’re making the same amount of money as you and you can barely rub two dimes together? Read on, because we’ll be talking to real people to break down how much things cost, and how they’re paying for it.
When it comes to money, people of all generations throw around catchphrases and adages like coupons at Macy’s without ever actually knowing if they’re true. People spend their whole lives soaking in all of these finance tips and philosophies, only to hit their twenties and have a total WTF moment because these tips are either completely untrue or are no longer suitable for the lives millennials lead. Mainstream media and older generations love to make jokes about avocado toast being the cause of our financial woes without actually acknowledging how different life is for young people today—riddled with student loan debt, an insane housing market, the list goes on.
We’re Lauren and Kelda, millennial sisters (and avocado toast lovers) living in Seattle, WA. After entering the real world ourselves and watching so many peers come to view money as a subject to be feared and overwhelmed by, we felt compelled to make finance an approachable and exciting topic, not only for our friends, but for all millennials. Instead of focusing on small actions like skipping your morning latte, we want our peers to understand the big deals—compound interest, credit scores, the power of investing—the needle-moving and life-changing concepts. While between the two of us, we do have a background in corporate finance, we truly believe that anyone can master their personal finances and that, no, you don’t need to be “good at math” to do so. Together we run Hello HENRYs, a blog on all things personal finance. Kelly Kapoor may be the business bitch, but we’re the finance bitches, betches.
Outside of bottomless brunches, Real Housewives marathons, and overpriced skincare, engaging in healthy debate (aka proving people wrong) just may be one of our favorite pastimes. There is no topic that makes this more true than money. Today, we’re sharing five of the most common finance myths and why they are actually so false.
1. All Debt Is Equally Bad
(Mostly) FALSE.
Did anyone else grow up hearing about debt as terrible, scary, or dumb? But then you were accepted to college and immediately encouraged to take out thousands of dollars in loans as the first “adult” decision of your life? Ironic, huh? The thing is, though, this happens all the time, and the reality is that the majority of millennials do have some kind of student loan debt. In and of itself, debt is obviously money that you spent without actually having, so in theory, it is never amazing. However, it’s super important to differentiate between kinds of debt.
Debt that is used to better your life can actually be seen as an investment that will help improve your financial health; and while yes, a trip to Bali 100% would better our lives, that’s not what we’re talking about here. Debt such as a mortgage or a student loan will (hopefully) give you a return on that initial debt investment. Provided that you are only taking out the exact amount that you truly need, receive a low (5% or lower) interest rate, and can afford the monthly payment, these debts are typically worth it and better your financial health.
Credit card debt, or a car loan for a new Range Rover (when your budget is more 2007 Toyota Camry), on the other hand, is not only hard to get out of, but is also not something that is usually an investment in your future and will cause your credit score to take a hit.
When evaluating your debt, always prioritize getting out of the “bad” debt and paying off the debt with the highest interest rate first.
2. Credit Cards Are For Emergencies Only
FALSE.
Okay, talk about scary. This kind of thinking is exactly why so much of the country is in severe credit card debt. Saying credit cards are only for emergencies or big (aka expensive) purchases, implies that credit cards should be used only when you don’t have the funds to cover the purchase yourself. Uh…what?
On the contrary, credit cards should only be used when you DO have the money to cover the purchase. Literally nobody should be judging you for using a credit card to buy your weekly groceries or morning Starbucks—which has happened to us, by the way. This judgment comes because people assume that if you’re using a credit card, it means you can’t afford it. Again, the exact opposite of when and why you should use a credit card.
As long as you can pay your balance in full each month, credit cards can be an amazing tool to earn rewards on money you are already spending. They can also provide travel/purchase protection and protection against fraudulent charges, and help you build credit, earn points for free travel, and a myriad of other amazing benefits. We use our credit cards for literally every single purchase that can be made using them. Obviously, we aren’t going to force anyone into using a credit card, but we are going to be extra bossy about ensuring that you use them only when you have the funds to immediately pay them off. And also a PSA: stop judging other people’s financial lives when you, very likely, don’t know anything about them.
3. Monthly Rent Payments Are A Good Indicator Of The Mortgage Payment That You Can Afford
FALSE.
When Lauren bought her first home last year, this was a huge learning moment. For so long, we had heard “If you can afford $X in rent, that same amount could easily be your mortgage payment!” Not true. Owning a home comes with SO many additional monthly payments that are not part of the equation when you’re renting. Property taxes, home insurance, HOA dues, PMI (insurance charge if you put down less than 20%—which is extremely common for first-time home buyers). All of these additional fees can easily add up to hundreds of dollars a month in payments. In actuality, if you want your housing payment to stay the same from renting to buying, you’ll need to look for a home with a mortgage payment significantly less than your current rent payment.
Also, part B to this equation: Whoever said buying is always smarter than renting was so false. Buying a home can be a smart investment in your financial future, but it isn’t always. If you’re renting and making other key investing decisions, you can be equally as set up for success in your future, while also not having to deal with the nightmare of needing a new roof or water heater.
4. You Can’t Afford to Invest Until You Have No Debt
FALSE.
Actually—you can’t afford not to. Some financial advisors actually tell you not to invest until you have no debt…which, if you have student loans, would mean you aren’t making any investments until you’re probably in your early thirties, at least. Yikes! There is a super mathematical and logical way to look at this, and it’s called the interest rate. You want to throw your extra funds at the highest interest rate. If your student loan has the average 3.5% interest rate, but you could be earning 8-10% in an investment or retirement account, you’re effectively losing money by choosing to pay extra on your student loans. Obviously, you always want to make the minimum payments on all of your accounts each month, but after that, your priority for your extra funds should be to the option with the highest interest rate. If you have credit card debt, this will likely always win out.
While we’re on the topic of interest rates, another PSA, your hard earned savings and emergency funds should not be sitting in a traditional, low interest savings account at a brick and mortar bank. If you aren’t earning a minimum of 1.8% or higher on your savings account, you’re doing it wrong and leaving money on the table.
5. Closing Old Credit Cards Will Boost Your Credit Score
FALSE.
Credit scores are something people talk a lot about, but usually have no idea what actually goes into them. There is literally no mystery about them, though. Remember back in college when the professor laid out the syllabus and what percent each category was worth? I don’t know about you, but, as soon as we saw “Attendance” listed at just 5%, we basically gave ourselves a free pass to have a little too much fun on Thursday nights and miss every Friday morning lecture. I mean, at just 5%, we could still come out with an A. Credit scores are pretty much the same.
FICO literally lays out the five factors that go into earning a perfect credit score and how heavily each factor is weighted. Closing old credit cards hurts two of the five factors: credit utilization rate (30% of your score) and length of credit history (15% of your score). Closing old credit cards could impact almost half of what goes into your credit score. Not a decision to be made lightly.
Credit utilization rate refers to the amount of credit you are using as a percent of what you have available. Let’s say you have two credit cards. Credit card A has a $5,000 balance with an $8,000 limit. Credit card B has a $1,000 balance with a $20,000 limit. Currently, you are using $6,000 of credit out of $28,000 available—just 21% and below the max target of 30%. Let’s say you decide to close card B (after paying it off) because you barely use it. Your balance dropped to $5,000, but your available credit also dropped to $8,000! That puts your new utilization rate is 63%—not good!
In addition, while credit history is a smaller factor of your score at just 15%, this is a challenging one for millennials to score highly on because we don’t have time on our side. If you decide to close your old college credit card because you don’t use it much anymore, you’re literally closing one of your longest chapters of credit history—also not good.
Obviously, there are some exceptions to this rule—if closing one card would not drastically affect your utilization rate, you have accounts with longer/better history, a card has a steep annual fee that you aren’t getting enough benefit out of, etc. The point is, though, closing a card can have serious consequences on your credit score and is not a decision that you want to make lightly.
There you have it: five of the most commonly thrown around financial myths proven wrong. Talking money is never that fun or glamorous, but the most important thing is to nail the big picture ideas. By doing so, we promise that you can achieve your financial goals, like saving for retirement or buying a home, while still going to Soulcycle, happy hour, or whatever it is that enriches your life and brings you joy! Even with student loans and a less than six figure salary. We are living proof.
Images: Sharon McCutcheon / Unsplash; Giphy (3); whenshappyhr (2) / Instagram
It’s easy to get caught in the marketing traps of credit card companies, especially for first-time owners. Alexa von Tobel is the founder and HBIC of LearnVest, the Chief Innovation Officer at Northwestern Mutual, and the New York Times bestselling author of Financially Fearless and she’s here to help all you fiscally confused betches out there. We asked her what credit card you should consider getting based on your spending habits and lifestyle. Read on for Alexa’s advice, and for more career and adulting advice, pre-order our third book, When’s Happy Hour?
I always advise people to identify their priorities before choosing what credit card is right for them. First, think about your goal: Do you want cash back? Do you travel a lot on one airline? Do you want to use points for a trip you wouldn’t normally pay for? All of these are important since you don’t want to change your spending habits once you get a new card. Here are a few to get you started:
If You Want To Get Cash Back Without Thinking: Citi Double Cash
Other cards get more back in certain categories, but this is the most no-thinking-involved card out there. The Citi Double Cash earns 2% cash back on all purchases. Think of it like getting a 2% discount on everything you buy. You simply redeem for statement credits and don’t have to think any further than that. Two cents per point is really the benchmark for all other cards. If you’re not getting that much back on your redemption (divide the dollar value by the number of points you redeem), you’re better off just using the Citi Double Cash.
If You Cook At Home And Drive Everywhere: American Express Blue Cash Preferred
This card gets you 6% cash back on up to $6,000 spent at grocery stores; after that, it’s just 1%. It also gets 3% at gas stations and select department stores. Shop anywhere from Kohl’s to Neiman Marcus with no set limit. Those big cash-back percentages don’t apply at Wal-Mart, Target or discount clubs, but if you spend more than $1,500 on groceries in a year, the card already pays for its own $95 annual fee. That’s not even considering the unlimited 3% back or the great extended warranty benefits of an AmEx.
You Spend All Your Money On Dining Out And Travel: Chase Sapphire Reserve
The Sapphire Reserve’s $450 annual fee sounds steep, but it quickly pays for itself. First, you get a $300 credit every year toward travel. So if you book plane tickets or hotels, that effectively cuts the fee to $150. You also get a $100 Global Entry/TSA Precheck credit that’s good for five years, as well as lounge access with unlimited guests. Every time you fly, instead of waiting in lines and eating at Cinnabon, you’ll zip through security and sip on an adult beverage for free.
The real kicker comes through the Sapphire Reserve’s point accrual and partner transfers. You can earn three times the points on dining and travel (that includes taxis). While Chase offers a 50% bonus to redeem points for travel through its travel portal, you could instead transfer out to airline partners like Singapore Airlines. You’ll be flying in a private suite to Asia for just 120,000 points. With a 50,000-point signup bonus, you’ll get there pretty quick. Once you’re there, there’s no foreign transaction fee either, which will likely save you a bundle.
You Love Planning And “Deals”: Discover It Card Or Chase Freedom
Both of these no-fee cards offer rotating quarterly categories where you earn 5% back. For example, Discover it Card earns 5% back at restaurants from July through September when you’re enjoying the height of summer, then another 5% on Amazon and Target purchases from October through December when you’re stocking up for the holidays. Plan wisely, and you cash in—without having to pay a dime for the trouble.
You Need To Tackle Your Current Credit Card Debt: Chase Slate
Maybe you went a little too crazy on gifts last Christmas, or you ended up spending a lot more on that vacation to Santorini than you’d planned. It happens. Rather than staying in that hole, transfer your high-interest debt to the Chase Slate card, with a $0 transfer fee and 0% APR for the first 15 months on your balance transfers and purchases. Stay after it, and you could be debt-free in no time.
A final thing to consider: If you fly a lot with one airline, consider getting that airline’s credit card. For example, having one of American Airlines’ co-branded cards will let you check a bag for free—that’s normally $25 each way, so the savings can really pile up.
For more advice on credit cards, adulting, and career, pre-order our third book, When’s Happy Hour?, out October 23!
Images: Hanson Lu / Unsplash
Once you’ve been weaned off The Bank of Daddy and are forced to deal with your own finances, sh*t can get pretty scary. There’s more to that plastic card than just swiping, so we enlisted Alexa von Tobel, the founder and CEO of LearnVest and the Chief Innovation Officer at Northwestern Mutual, for some serious help. Alexa is also The New York Times bestselling author of Financially Fearless, so clearly she knows what she’s talking about. Here, we asked her all about credit—how to build it, how to ruin it, and why you need it. And for more career and adulting advice, pre-order our third book, When’s Happy Hour, here!
How do you get credit?
Building your credit isn’t complicated, but it takes time, discipline, and a bit of knowledge. First, you’ll need to apply for a credit card. If you don’t have at least a passable credit history, actually getting a traditional (aka: unsecured) credit card in your name can be surprisingly difficult. So if you can’t get approved for an unsecured card, consider signing up for a secured credit card.
Next, start building your credit. There is a myth that using more of your available credit translates to a higher credit score. The opposite is actually true. In reality, lenders worry that you’re in over your head financially when you spend a big chunk of your credit line. To help assess this, they’ll look at your credit utilization ratio. This is the percentage of your total credit limit that your current balance represents. For instance, if all your cards give you access to $20,000 of credit, and your current balance is $5,000, you’ve got a credit utilization ratio of 25%.
The most important thing to remember when building your credit is to get serious about due dates. I recommend that people request recurring transfers or autopay via your bank. Make sure though that you’re setting an amount that is doable for your budget. Creating calendar events on your phone so you receive alerts before each bill’s due date is also a great method.
What ruins your credit?
Not making payments on time is the biggest factor that affects your credit score. It’s important to realize that it’s not just lenders that report to credit bureaus. Things like medical debt and missed utility payments can also ding your credit report.
The second-largest factor that can hurt your credit score is the amount you owe across your credit accounts. The biggest influences on this calculation are either your credit utilization ratio or the percentage of your available credit that you’re actually using. So, making sure your balances don’t balloon can go a long way toward helping maintain a good credit rating.
I also advise people to refrain from opening too many credit lines at once. This triggers a “hard inquiry” on your credit report. But closing credit accounts you already have could impact your length of credit history negatively. Even if you don’t use a card often, keep it open and charge something small on it every once in a while.
What do you need good credit for?
You need good credit for almost everything! Having good credit sets you up for success when you need to apply for a loan or line of credit. Your credit can help determine whether you can even get a mortgage or car loan in the first place. Plus, you could even miss out on a perfect apartment rental or job opportunity—both landlords and employers have been known to check out an applicant’s credit history. Having no credit at all or bad credit means that you either won’t be approved by future lenders or may have to deal with some unfavorable lending terms, like paying higher interest rates.
What’s a good number of credit cards to have?
There’s no magic number for how many credit cards a person should have. It all depends on what type of person you are. Responsible users may benefit from having multiple cards. If you pay off your balance in full each month, it can be a good strategy for a few different reasons. You can reap more rewards and boost your credit score. If you’re self-employed or a freelancer, it can help with easier bookkeeping because you could keep your work and personal expenses separate.
Despite the potential benefits of having multiple credit cards, there are drawbacks. And the stakes are high: If you destroy your credit score by, for instance, consistently missing payments on multiple cards, it could take years to rebuild that number. Plus, carrying a greater number of cards means the potential for racking up a greater amount of debt overall.
Bottom line: don’t open more credit cards that you can manage. Be honest with yourself about your spending habits and responsibility.
Should I just have a regular credit card with a bank or is my retail card helping me with credit?
I would recommend having a regular credit card with your bank or choosing one of the cards I mentioned. This depends on your spending priorities and goals. Retail store credit cards that people open at the register because they get 10% off their purchase right on the spot, can hurt your finances.
This is because retail cards tend to have higher interest rates than regular credit cards. They also tend to have lower credit limits. So if you spend a lot on a retail card, it could look like you’re close to maxing out your limit. This could hurt your credit utilization ratio, and thus, your credit score. Also, their “special offers” (like getting 10% off on the spot) could end up costing you. Retail stores are known to dangle deferred-interest offers in front of consumers without properly explaining what that means. In a nutshell: You don’t pay interest on your purchases for an introductory period. But, if you have any outstanding balance left at the end of that period—no matter how small—you’ll be back-charged. That would be interest on all the purchases you made in that time frame.
For more career and general adult life advice, pre-order our third book, When’s Happy Hour? and stay on the lookout for our new podcast, When’s Happy Hour!
I first realized I needed to improve my credit score when trying to take advantage of the 20% off discount I could get by opening a GAP credit card. I thought “sure, I want these jeans and I would like them to be cheaper.” Turns out credit cards don’t totally work that way, because you can only get a credit card if you have a credit history, and you can only have a credit history if you get a credit card (among other ways, but that’s the easiest). It’s kind of like how you need job experience to get a job, but nobody will hire you without experience. For the record, at age 19 I had no credit history and no chance of getting a discount on those jeans.
I’ve come a long way since then, and I have learned quite a bit on my journey from credit-less to Credit Karma user to about-to-get-some-free-shit-from-magical-rewards-points. First of which being: don’t waste a credit check on a pair of mediocre jeans from the GAP. I’m not saying I’m an expert, and this is Betches not like, the Financial Times, but I do hope that I can share some relatable wisdom for those of you that don’t know what a credit score is, still use your parents’ credit card, or didn’t realize you can literally get paid to shop (see cash back card below). Because building credit and then deciding which cards to get once you’ve built that shit is harder than finding a quality photo of Kylie Jenner’s baby bump.
Step 1: Build Some Credit
It’s hard af to get your first credit card (see GAP story above), but it’s not impossible. Unfortunately, most starter credit cards require a deposit, will have a low credit limit, and will give you absolutely no rewards. But life is rough and we all gotta start somewhere. So if you are a total credit newbie, or have to crawl yourself back up from a shitty credit score due to overdue student loans, here are some decent options:
Capital One Platinum Card: No annual fee, and you can get an increased credit limit if you behave (read: pay that shit on time) during your first five months.
Discover it Secured Card: This ish requires a deposit, but you can get cash back on purchases and it helps you build your credit as long as you are responsible (again, pay that shit on time).
P.S. When I say “pay that shit on time” I mean ALL that shit. None of this “minimum payment due” crap—it’s is a trap. Pay your full balance whenever it is due or you will buried in interest, debt, and shitty credit for the rest of your life.
Step 2: Get Some Rewards
Turns out the benefits of credit cards extend far beyond the ability to spend more money than you have in the bank (I am by no means encouraging this behavior—seriously, don’t do it. But it is a thing). You can get free flights, hotel rooms, and free money (sorta) just by buying things with your credit card and paying it back on time. So once you have built up some credit, you should throw your debit card away, shred your cash, and get in on one of the rewards cards below, because it’s basically like getting paid for your responsible shopping habit.
Straight-Up Cash Back Rewards
Chase Freedom: You get $150 cash back when you spend $500 in the first three months. It’s basically like a buy 2 get 1 free situation.
Bank of America Cash Rewards: This card has no annual fees, you get 1% cash back on all purchases plus 2% at grocery stores and wholesale clubs and 3% on gas for your first $2,500 in purchases each quarter. And if you deposit your cash back into a Bank of America account, you get a 10% bonus. That’s right—literally free money.
Travel Rewards
Chase Sapphire Preferred: Get 50,000 points to redeem on travel when you spend $4,000 in the first three months. So like, buy an expensive plane ticket, and then get some points to help make your next plane ticket less expensive.
Airline Specific Cards: If you fly the same airline on a regular basis, you should probably be working those mileage points. Southwest, Alaska, and United all have credit card options, and if you have United’s rewards credit card, maybe they will let you keep your dog alive.
Amex Starwood Preferred Guest: Earn enough points and you can get free nights at fancy-ass Starwood hotels (The W, St. Regis, etc.). Plus, this one is a pretty purple color and I always felt like having an American Express card means you made it in life.
Step 3: Swipe Responsibly
Whatever card you end up getting, even if it’s not one of the above credit cards, fucking pay your bill on time. Because none of the rewards from credit cards are worth it once you start getting charged interest. Set up auto pays, write it in your calendar, do whatever you need to do to pay off your balance IN FULL each month. And remember that every time you apply for a card, your credit score takes a hit (it’s a vicious cycle, I know. Life, again, is unfair). So please don’t go apply for every card on this last and say Betches told you to, because we sure as hell didn’t (and the credit bureaus aren’t gonna care).
Images: Giphy (3)
