As a retail banker I came into contact with many people who had an intense and irrational fear of credit. Often these were younger people who had heard horror stories from siblings who ruined their financial picture a few years after acquiring a credit card and then spending out of control. Sometimes it would be the parents who saw their kids get lost in credit. Both of these scenarios were odd to me for several reasons. First of all, wouldn’t the younger sibling have learned from the example their brother or sister set for them, and secondly, why were their parents not more involved in teaching them about credit in the first place?

Credit does not need to be feared; instead, the chances of irresponsible use of credit can be mitigated with better education and understanding of how credit works, how to use it, and how to manage it wisely. Credit is a very valuable tool. Having credit allows you to have flexibility of cash flow, earn rewards for spending what you already spend (rewards credit cards), and helps you build credit to do things in the future, like buy a house/car or take out a loan to start a business.

One of the most common fears of credit I hear when talking to people ages 18-30 is the fear of getting a high spending limit and going out of control and into debt.

I believe this idea came from the “glory days” of credit cards when anyone could apply and get access to way too much money with no real means of paying it back. I would like to point out though that this is no longer the norm in the industry. Getting a credit card now takes some credit history and strong enough income to support the request. For those who are trying to get their first credit card, I applaud you if you can get a limit much over $1,000. The point I am trying to make is that with such small limits to start out with how can anyone dig themselves into a hole they can’t get out of? If $500 – $1,000 is enough to ruin your financial picture then you may want to take a harder look at other areas in your budget.

If you are approved for a limit that you feel uncomfortable with I have great news for you, you can request to lower it! And if they don’t lower the limit then close the card and try a different one. If you are really too concerned about your ability to manage your spending then lowering your limit is a great way to protect yourself. But then at least you are still building a credit score and benefiting your future self. Numerous times people would come in looking for a loan to start a business, or get a car loan but would have no credit history or credit card because they were told that credit cards are bad and to stay away. Staying away is exactly what has ruined their chances of getting approved for the things they really want.

Where did the idea come from that a credit card should only used for things you can’t afford? That is ridiculous!

The right time to get a credit card is not when you want to buy something big but don’t have the money to pay for it. You have a fixed amount of money in your bank account; spend it on the credit card but don’t spend more than you have to pay back with. This is a great tip for those using a debit card to buy things like gas, groceries, or other items that can rack up big rewards on many travel and cash reward cards. Those rewards can be looked at as minor discounts on everything you already purchase. Plus, if your checking account or savings account earns interest you will continue to earn interest on the money in the account (minimal, yes I know) until you pay your monthly bill (in full please!). This takes discipline and practice but it will be very beneficial if you master it.

The bottom line is that YOU control your spending whether it is on a credit card, debit card, or with cash. Why not choose the form of payment that will allow you to get a mortgage, take out a loan, rent the apartment you want… the list goes on and on. Have you ever met someone that has had a bad experience with credit? What could they have done differently?