The one constant in life is change, especially when it comes to your finances. The budget you keep during college often will look very different from the one you have when you start a family or the one you follow when you retire. So it’s important to regularly review all of your financial options ‒ ‒ including your credit cards ‒ ‒ to make sure they still make sense for your current situation. Here are examples of how different types of credit cards could serve your financial needs at various stages of your life.
You’re in college
If, like most students, you’re on a tight budget, you don’t have to write off the idea of a credit card. Instead, look for one that complements how you spend and manage your money. This might mean applying for a credit card with a competitive rate and no annual fees, or a secured credit card that requires a cash deposit as collateral and may be an effective way to help build credit.
If you’re confident you’ll repay the full balance of your card every month, you may want to consider a rewards credit card. For example, some card issuers offer their cardholders pre‒sale benefits, allowing them access to buy tickets for concerts, sporting events, or shows before they go on general sale. In other cases, cardholders can earn points on credit card purchases to redeem for travel rewards, gift cards or other merchandise, which can help cover the costs of impromptu road trips, back‒to‒school clothes, or the occasional late‒night take‒out.
For more advice on trimming expenses while you’re in school, check out 5 Budgeting Tips to Manage College Costs and Save You Money.
You’re just starting out
With college behind you, you’re focusing on establishing a life for yourself ‒ perhaps renting an apartment, buying a car, or securing that first, all‒important job. You may be tempted to use your card on big‒ticket items you can’t afford yet, but resist the urge. Instead, reserve it for set expenses you can pay off every month, like utilities or gas. This may help you build credit and start to create a history of responsible borrowing, all of which will come in handy when you’re applying for a loan, job, or even a place to live.
David Oxley, 23, who works in engineering in Houston, Texas, discovered that firsthand when he went to rent an apartment after graduating from college. “I had to go through tenant screening with a realtor when I wanted to lease my first apartment. I didn’t realize there would be a credit check, and that they would want so much personal information,” he says. “I was relieved that I’d been careful about managing my money while I was in college.”
You’re getting married or buying a home
Getting ready to tie the knot or buy your first home? A rewards credit card could help offset some expenses. For example, you may want to redeem any points you’ve already accumulated to help cover out‒of‒pocket costs. Need to buy things for the new home or the wedding? A credit card that gives you cash back on purchases may also help defray related expenses.
Thinking about applying for a credit card with a rewards program? Consider applying around the time you’re making a planned major purchase, like airfare for your honeymoon. Some cards offer bonus points if you spend a certain amount of money in a certain time frame, and you can use those points to offset future expenses.
You’re starting a family
Raising a child can be expensive, and you may be looking for ways to save on everyday expenses, like groceries and gas. Some credit cards offer points or cash back on such purchases, so look for one that aligns with your family’s spending habits. Have a major purchase coming up? Some cards have introductory offers, such as low interest rates on purchases for a set period of time, that could provide cost‒savings depending on your spending habits. However, make sure you understand the terms of the credit card offer in order to be prepared for any changes in interest rate that may occur when the introductory period ends. Additionally, you may also be able to get cash back on purchases with select rewards cards, so it’s worth investigating if this is an option before you buy.
You’re an empty nester
Now that the kids have moved out, you may have a little more time to pursue your interests. If traveling is a priority, consider a travel rewards credit card that offers perks such as air miles, discounts on in‒flight purchases, and free checked bags. Janet Barkman, 52, is a retired school teacher that lives with her husband in Florida but regularly visits their daughter in Pennsylvania. “We’ve saved hundreds of dollars by earning air miles on our frequent flyer credit card,” she says.
Of course, not all travel rewards programs are created equal. If you need help figuring out which one is right for your spending and travel habits, read our article, How to Pick Travel Reward Programs.
Whether you’re getting your first apartment, raising a family, or preparing to enjoy retirement, it may be wise to re‒evaluate your credit card services and ensure they are the best fit for your lifestyle. To find out how to maintain your credit health ‒ ‒ which may help you qualify for some of the best offers ‒ ‒ check out our 10 Healthy Credit Tips infographic.