Why I Finally Got My First Credit Card – At 28

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Why I Finally Got My First Credit Card – At 28

For the first 28 years of my life, I lived without a credit card. I'd heard for years that I should get one, but wasn't interested. Everyone told me that having a credit card would be helpful to my credit score and could be useful to have.

But credit cards meant only one thing to me: debt.

I had already taken out $81,000 in student loans to go to college and pursue my master's degree at my dream school -- in my mind, it didn't make sense to have a credit card while I was paying down so much debt. I had gotten along fine with my debit card thus far and didn't see the point.

I realize now that my feelings about credit cards weren't unique. Many younger millennials are saying no to credit cards and opting for debit cards instead. According to a 2014 survey by Bankrate, 63 percent of millennials ages 18 to 29 don't have a credit card.

But at 28 years old, I changed my mind and got my first credit card. Here's why:

Debit cards typically offer less fraud protection.

A few years ago, I was scrolling through my bank account statements when I noticed a suspicious charge. It was for a company based in another country and didn't ring any bells. Nervously, I continued examining my account and found other charges I didn't recognize.

I immediately called up my bank, and they put a freeze on my debit card. Unfortunately, this resulted in another issue -- the bank was closed because it was the weekend and my debit card was now frozen. In other words, I had no access to cash or any other forms of payment.

It was a tough few days managing without a debit card or much cash. In addition, it was a hassle proving that the charges were in fact fraudulent -- I had to file a claim and submit various items to prove my identity.

After doing some research, I discovered that debit cards typically offer less fraud protection than credit cards. This is especially true if you fail to report unauthorized charges or that a card is lost or stolen.

For example, how much you stand to lose if someone makes an unauthorized charge on your debit card usually depends on how quickly you report the fraud. According to the Federal Trade Commission, if your card is lost or stolen and you report the loss within 60 days after your statement containing the first unauthorized charge is mailed to you, you could lose as much as $500. Worse, if you wait until after the 60 days, you may be responsible for the entire loss that occurred before you notified the financial institution.

On the other hand, if your credit card is lost or stolen, the most you'll have to pay for an unauthorized charge that you report is $50.

Credit cards can diversify your credit mix.

My on-time student loan payments appeared to have a positive effect on my credit score. However, a funny thing happened as I started to pay off some of my student loans: My credit score dropped slightly and I was left perplexed.

After further investigation, I found out that your credit mix - or the various kinds of credit on your credit report - may make up ten percent of your credit score.

My credit portfolio only had one type of loan at the time -- my student loans -- and once they were fully paid off, they'd show up as closed accounts on my report. Realizing that after all my student loans were paid off, I'd have nothing else in my credit portfolio, I decided to get a credit card to round out my credit mix.

Credit card rewards can be useful.

One of my greatest passions is traveling, which is hard to do when you're focused on paying off debt. However, I was determined to travel and still pay off my student loans at the same time.

I had heard about people using credit card rewards to redeem free or low-cost travel, so when I got my first credit card, I made sure it was one with travel rewards. After using my credit card for things like groceries and other everyday items, I met their spending requirements ($1,000 in 3 months) and got a 30,000-mile sign-up bonus that I combined with some preexisting miles to travel to Spain and Portugal for just $63.

I was very careful to always pay my balance in full and only use my credit card for necessary items. Rewards cards can be nice if used responsibly, but if you find yourself spending more and/or getting charged an annual fee that outweighs the benefits, they may not be a great fit for you. Ultimately, I enjoyed using my credit card to my advantage.

Bottom Line

For 28 years, I successfully navigated life without a credit card. Spending only what I had -- and not relying on credit -- helped me pay off a lot of debt. However, while choosing to get a credit card was a decision I thought long and hard about, it's been worth it for me.

After getting my first credit card and making on-time payments for over a year, my credit score went up by 40 points. Now I'm confident that my better credit score could help me out in certain situations, such as renting an apartment (without a cosigner) or applying for student loan refinancing.

But my goal is to be a responsible credit user, while still keeping my spending in check. So for now I'm using credit cards for fixed bills such as health insurance, while I use my debit card and cash for fun money.

Are you a millennial? Do you have a credit card? Why or why not?

About the Author: Melanie Lockert is a freelance writer and editor currently living in Portland, Oregon. She is passionate about education, financial literacy and empowering people to take control of their finances. Her work has been featured on Rockstar Finance, GoGirl Finance, The Globe and Mail and more.

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