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That Time Your Dad Helped You With Credit Cards

June 15, 2015
Credit Card Basics, Credit Cards, Rewards Credit Cards
That Time Your Dad Helped You With Credit Cards
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Kerry Hannon will always remember when her dad helped her find a way to pay off her credit card debt. It was 1987, and she had just moved to New York City to start working as a reporter at Forbes. Her living expenses shot up, and soon, so did her credit card debt.

“I was using one credit card to pay off another, which is the ultimate sin,” she says, recalling her 25-year-old self. “I remember the fear of having the creditor call.”

Terrified of how quickly her debt was ballooning, she turned to her dad for help. When she came home to Pittsburgh to visit, he sat down with her and helped her come up with a budget and a plan for paying back the balances — which she did over the course of the next couple years.

Many times, as in Hannon’s case, the credit card lessons we remember the most come from our parents. To be sure, not all dads offer the best financial guidance — in some cases, the most valuable credit card lessons you learn from your dad may be about what not to do. But in celebration of Father’s Day, here are some words of wisdom from dads who know a thing or two about credit.

‘It’s a whole lot easier asking’

Choosing a credit card can be exasperating. But asking lots of questions is a good starting point.

That’s why Hannah Kafer, 23, called her dad when she was looking for her first credit card, after graduating from college and leaving her Duncan, Oklahoma, home for San Francisco.

“Every time I have a money question, I call him,” she says. At first, she didn’t have enough credit built up to qualify for a credit card independently. But after paying off student loans for a short time, she was prepared to give it another go.

Her dad, Gary Kafer, a longtime banker who also does cattle ranching and farming, advised her to find a low-maintenance card and pay it off in full each month. After some more research, Hannah landed on a no-nonsense cash-back card. On her dad’s advice, she downloaded the issuer’s app. Paying through her phone was a lot simpler than using a computer, she says.

Asking around before making a big decision just makes sense, Gary notes. “I’d rather ask farmers who are older than me: How did you do this? How did you handle this problem? It’s a whole lot easier asking people than making mistakes yourself, which cost you time and money,” he says.

In addition to talking things over with family and friends — including, perhaps, your dad — consider reading reviews, consulting credit experts and calling issuers to ask specific questions. By taking advantage of all these resources, you’ll be able to make informed decisions about your credit, which could save money in the long run.

‘You better have a good reason for paying that interest.’

Dan Nygaard, a pastor living in Fort Collins, Colorado, has two grown sons with his wife of 39 years.

When he started talking to his kids about credit cards, he always gave them this advice: “You better have a good reason for paying that interest. For most consumer items, if you can’t pay cash for it, you can’t afford it.”

When his older son, Dustin, was in the U.S. Air Force, slowly chipping away at a couple thousand dollars in credit card debt from college, Dan helped him calculate the interest costs and encouraged him to pay off the debt more quickly. Once Dustin realized how much he’d end up owing if he made only the required minimum payments, Dan says, he decided to pay off the debt a lot faster.

If you want to avoid paying interest, simply pay off your credit card bills in full each month. Purchases on credit cards generally don’t accrue interest unless you carry a balance. (However, cash advances usually don’t have such a grace period; interest starts accruing right away.) If you really need to buy something you can’t pay off right away, consider using a 0% APR card to avoid interest.

» MORE: How to pay off debt

‘Don’t get overwhelmed.’

Once in a while, you may mess up. When that happens, talking it out with someone you trust can get you a little closer to finding a solution.

One of the most important things Kerry Hannon learned from talking to her dad about her credit card debt, she says, was to solve problems piece by piece. When she was in her 20s, after compiling large credit card balances, the debt had seemed insurmountable to her. Talking to her dad about it helped her take a step back.

“He said, ‘Look at it in baby steps. Don’t get overwhelmed,’” she says. She followed his advice, spending the next one to two years picking up extra freelancing work that didn’t interfere with her work at Forbes to pay off the debt. In the process, she learned to be more frugal and live within her means. Her dad has since passed away, but the lessons he shared with her have stuck.

“I swore I’d never run up a credit card again,” she says. “And I haven’t.”

Claire Davidson is a staff writer at NerdWallet, a personal finance website. Email: [email protected]. Twitter: @ideclaire7.

Image via iStock.