Iam a high school Senior, so I’ve got a lot going on in my life. I recently started thinking about how there are still things I need to know as I become an adult.
Get a car? Check.
Be hired at my first job? Yep, did it.
Apply for college? I’m on my way.
Understand how finances work? Well…I haven’t completely learned about that yet. I recently signed up for a debit card and feel comfortable using it. However, when it comes to credit cards, I don’t know much. As a teen, I wondered if it was necessary to think about my credit score this early.
Luckily, I was able to sit down with an expert. Inspired by recent member comments and surveys, The Washington State Employees Credit Union (WSECU) has rolled out newly designed debit and credit cards. One type is the Create Card, specifically designed so either younger people or adults without a credit score can build good credit and spending habits.
The expert in question was Andrew Becker, Vice President of Product Design, whose group developed the concept for the new Create Card. He kindly agreed to sit down with me to talk about the card’s benefits and the importance of establishing good financial habits early in life.
Why should young people want to have good credit?
“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. Establishing good money managing habits early in your financial history is important because often life-changing decisions depend on having good credit. 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 member’s credit score as a key 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 for anyone who has never needed credit before. “You can basically be any age and need to build credit,” Becker states.
However, he adds that “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.”
Do customers age out of this type of card?
The Create Card was designed to be your first credit card but with buffers, so once a member has consistently shown that they understand credit, making payments and spending money responsibly, WSECU recommends switching credit card types. Becker says that the Credit Union offers other types of credit cards with different benefits, like rewards points and cash back.
What benefits are offered to members with the Create Card?
One of the ways WSECU rewards people with Create Cards is by lowering their interest rate for every six months of on-time payments (up to two percent total). Normally, credit card companies charge cardholders $25 to $35 for each 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 penalty doesn’t break the bank for young members who are still getting the hang of finance management.
What do members need in order to apply for the Create Card?
When applying for this card, WSECU would like to see any lending history a member has and income records so they can figure out a comfortable spending limit for the customer. Some may not have any lending or credit history, which is also fine. If that information isn’t enough, a parent, guardian or other responsible person can co-sign on the account. Becker says that WSECU really just wants to get this card into the hands of young people to teach them good financial habits, which is why they added the co-sign feature and limited application qualifications.
Do you have to be a WSECU member to apply for this card?
Becker explains that to set up any type of account with WSECU, you need to become a member by at least opening a savings or checking account. The Credit Union was originally only for Washington State employees and their families, but in 2013, WSECU decided to expand their services to be available to all people in Washington State. Their website adds that they have 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?
“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,” Becker says. When WSECU first discussed the idea for a starter card, they wanted to be thoughtful about encouraging their young members to not borrow more than they can afford. He adds that WSECU works with a new Create Cardholder to decide on an amount (likely less than the upper limit of $2,500) that works with their monthly income and other expenses.
How can I get a Create Card?
For current or prospective customers 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 application, call WSECU at 800-562-0999 to speak to an employee who can help you apply, or you can fill out a paper or digital form (on one of the company’s iPads) in person at 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 a credit score, WSECU has released a few other types of credit card accounts. Information about the various benefits with these other services can be found on WSECU’s website.