Being only months away from graduation, I have a lot to figure out as I venture into adulthood.
Acquire a driver’s license? Check.
Get a part-time job? Yep, did it.
Complete college applications? I’m on my way.
Understand how finances work? Well…I’m still learning. I recently signed up for a debit card and feel comfortable using it responsibly. However, when it comes to credit cards, I have a lot to learn. As a teen, I wondered if it was too soon to think about my credit score. Luckily, I was able to chat with an expert. Inspired by recent member feedback, The Washington State Employees Credit Union (WSECU) has introduced newly designed debit and credit cards. One of these is the Create Card, specifically designed so younger people (or adults without a credit score) can build credit and good spending habits. The expert in question was Andrew Becker, Vice President of Product Design, whose team came up with the concept for the new Create Card. He kindly agreed to sit down with me to discuss the card’s features and the importance of establishing good financial habits early.
Why should young people want to have good credit?
Many big life decisions depend on having good credit. Developing good money managing habits early in your financial history is key. “The better you manage borrowing money and making those payments on time, the better you improve the score we’re all measured against,” says Becker. Often as people start to take on more responsibilities in their lives (like getting a new job after high school or college), they also need to make bigger purchases, like a car or home. In these scenarios, banks and credit unions will look at the person’s credit score as a determining factor for loan qualification.
Are the new Create Cards only for young people? Is there an age limit for this program?
The Create Card can be useful to anyone who has never needed credit before. “You can basically be any age and need to build credit,” Becker states.
“Generally speaking, I would say it’s oriented for a younger person, someone that’s just going from high school or college to the next step in their adult lives and wanting to build credit,” he adds.
Do customers age out of this type of card?
The Create Card was designed to be your initial credit card, but with a safety net so once a member has consistently shown that they understand how to effectively build credit, make payments, and spend money responsibly, WSECU recommends switching credit card types. Becker says that the credit union offers other types of credit cards with distinct benefits, like cash back or rewards points.
What benefits are offered to members with the Create Card?
One of the ways WSECU rewards Create Card members is by decreasing their interest rate for every six months of on-time payments (up to 2 percent total). On average, most credit card companies charge cardholders $25-35 each time they make a late payment. The first time a member makes a late payment with the Create Card, the fee is $10. The second time it’s $20, and any time after that is a flat fee of $25, so the cost is reasonable for new members getting used to regulating their finances.
What do members need in order to apply for the Create Card?
Upon application, the WSECU would like to view a member’s income records and lending history so they can work with the customer to decide on a reasonable spending limit. Some may not have any lending or credit history, that’s ok. If that information isn’t enough, a responsible second person (like a parent or guardian) can co-sign on the account. Becker says that WSECU really just wants to get this card into the hands of teens and young people to teach them good financial habits, which is why they added the co-sign feature and limited application prerequisites.
Do you have to be a WSECU member to apply for this card?
Opening a savings or checking account is the first step to establish a product or service with WSECU. When the credit union originally opened, it was only for Washington State employees and their families to utilize, but in 2013, WSECU made the executive decision to expand their services to be available to all people in Washington State, with “a special focus on those who, like our public employees, have the dedication and desire to serve and make a difference in our communities.”
The Create Card has a credit limit range of $250-$2,500. How is this rate decided upon for each customer?
When WSECU initially had the idea for the Create Card, they wanted to be considerate about encouraging their young members to not borrow more than they can possibly afford, Becker says. Looking at monthly income and expenses is how WSECU collaborates with a new credit card holder to decide on a limit (most likely less than the upper limit of $2,500). “We are trying to avoid getting people that are building credit for the first time in trouble and to where they are borrowing more than they can afford to pay back,” he says.
How can I get a Create Card?
For prospective members interested in applying for the Create Card, there are several ways to do so. You can visit WSECU’s website to fill out an online form, call WSECU at 800-562-0999 to speak to a representative who can help you apply, or you can complete a paper or digital form (on one of the company’s iPads) in a branch.
I am interested in becoming WSECU member, but don’t need the Create Card. What are my options?
For members who already have established a credit score. WSECU has rolled out a few other types of credit card accounts. There is information about the various other benefits with these other services on WSECU’s website.