- Personal Finance
Most Common Credit Card Traps Based on Consumer Age
Everyone who uses a credit card is in danger of having problems related to spending, debt and money management. However, the problems that we are most likely to fall prey to when it comes to our credit cards changes as we age. This is due in part to the lessons we’ve already learned from previous credit card use but is usually due more to the different expenses and challenges that we face in life at different times. Use this guide to get a sense of what your most common credit card problems are likely to be during different life stages so that you can keep things under control.
Credit Card Problems for College Students
College students are the ones most likely to use their credit cards for small, ongoing expenses. College students are most likely to use their credit cards on the following things:
o School expenses such as textbooks and gym fees
o Groceries and dining out
o Gifts for themselves and others
o Daily expenses towards the end of the semester when student loan money runs out
o Random, impulsive purchases
College students are most likely to run into credit card problems surrounding getting and properly using credit cards. Examples include:
o It can be tough to get a credit card when you don’t have credit.
o There can be a lot of pressure to get a credit card when you may not be ready yet.
o Overspending on credit cards is common when just starting to learn to use them.
o College students may have problems with late payments and fees because they haven’t developed money management skills yet.
o Students generally have a low income, which can make it tough to pay off credit card debt.
Credit Card Problems in your Late Twenties
When you graduate from college, some of your expenses will be the same but others will be different. People in their late twenties may begin to use their credit cards for:
o New wardrobe and beauty products to fit in with a move to a professional appearance
o Consumer electronics
o Automobile repairs. Your old junker from college might be getting old!
o Weddings and wedding-related items
By the time that you’ve had credit cards for several years, you’ve usually learned to make on-time payments but you’ll have other credit card problems including:
o Failure to choose and use the right credit card. By now you may qualify for credit cards with better rewards or better terms. You should be using the right cards.
o Spending too much on big expenses like weddings without the income to quickly pay off the debt
o Using cash advance checks to make up for money mistakes (such as using them to pay the rent)
Credit Card Problems in your Mid-Thirties
Most people’s lives have changed a bit again by the time that they’ve reached their mid-thirties. Some of the new things that you might be using credit cards to buy include:
o Diapers, toys and other items for the new additions to your family
o Home décor items especially for those who buy their first home
o Investment in eco-friendly products and other socially responsible items
Some of the challenges that are faced with credit cards during this time period include:
o Trouble adjusting to changes in income and expenses related to having children resulting in overuse of credit cards and / or problems with late payments and fees. (Yes, those problems you had in college could come back!)
o Relationship issues related to money problems. Couples need to learn how to talk about money and share credit cards at this stage in their lives.
Credit Card Problems in your 40’s and 50’s
As you get a bit older, your spending habits will have leveled out a bit. You may be spending more on your family items as kids get older and need more expensive things. You may also find that you are spending more on health-related stuff as you get older.
Some of the challenges that come up with credit card use during this stage of life include:
o Failure to pay attention to credit issues. This is a big problem for busy families. Make sure that you’re checking your credit report regularly and staying on top of what credit cards are best for you.
o Still relying on credit cards for regular purchases. By now you should be using credit cards for emergencies, paying the balance off in full the rest of the time. You need to start saving for retirement.
Credit Card Problems After Retirement
Just when you’ve gotten things under control, you retire and everything changes again. You may spend more on travel because you have the time to travel. You may spend more at the holidays because now you have grandchildren. You may be spending more on medicine and health related stuff.
Common problems with credit cards at this stage include:
o Re-adjusting to a lower fixed income. This can cause people to rely on credit cards, something that you shouldn’t be doing at this stage in your life.
o Using credit cards to help your loved ones. Your adult children should be standing on their own two feet by now.
o Addressing credit issues with others. As you get older, your adult children and other well-intentioned people will want to help you with your finances. You’ll need to learn how their help does and doesn’t fit into your life.