Members of Generation Z are embracing credit cards with remarkable enthusiasm, opening lines of credit at an unprecedented pace. In response to this trend, personal finance experts are working diligently to ensure that these young consumers fully understand the implications of their financial decisions. Among those advocating for financial literacy is Courtney Alev, a consumer financial advocate at Credit Karma, who sat down with Tori Dunlap, host of the popular ‘Financial Feminist’ podcast, in October. Their goal was to demystify the often-intimidating process of building and managing credit as a young adult—an essential yet frequently misunderstood part of personal finance.
Alev emphasized that although the concept of credit can initially appear complex or even overwhelming, it serves as the very backbone of an individual’s long-term financial stability. Credit, she explained, functions as a measure of trustworthiness in the eyes of lenders, landlords, and even certain employers. Credit cards, in particular, are powerful instruments—akin, as Dunlap metaphorically described them, to knives: sharp tools that can either be used skillfully to one’s advantage or mishandled in ways that cause lasting harm to a person’s creditworthiness. The key lies not merely in acquiring a credit card, but in learning how to wield it responsibly.
Dunlap reinforced the golden rule shared by most seasoned finance professionals: always make credit card payments on time, and whenever possible, pay the full balance rather than just the minimum amount due. Doing so prevents the accumulation of interest and demonstrates consistency to credit bureaus. Yet, as Alev clarified, simply paying bills is just the surface level of a much broader picture—credit building encompasses many nuanced behaviors that gradually shape one’s financial profile.
For beginners, Alev advised starting small and simple. Instead of using up an entire credit limit—say, a $500 starter cap—on a single purchase, she recommended charging only small, recurring expenses such as a Netflix or Spotify subscription to the new card. Over the course of a year, this might result in roughly $100 of total spending, assuming each monthly charge is promptly paid off in full. While such an amount may seem modest, this deliberate and consistent activity forms a solid year-long record of responsible credit use, which is invaluable when viewed through a lender’s lens.
The establishment of credit history plays a crucial role in how financial institutions evaluate borrowers. A positive track record signals reliability and can significantly influence eligibility for future loans, premium credit cards, and favorable interest rates. Beyond borrowing, credit scores often impact housing applications, insurance premiums, and—in certain industries—even job opportunities. In essence, a strong credit foundation extends its influence across almost every major financial decision in adult life.
Once the first credit card is in use, Alev advised paying close attention to another pivotal factor: credit utilization, or the ratio of credit currently used to total available credit. Reflecting on her own early experiences with credit, she recalled instances where a single large purchase caused her utilization rate to spike dramatically, leading to a temporary decline in her credit score. High utilization suggests to creditors that a borrower may be overextended, even if they have never missed a payment.
To mitigate this risk, Alev strategically began making payments more frequently—every five to seven days rather than waiting for the monthly due date. This approach ensured that her card balance stayed consistently low, preventing utilization ratios from ballooning. Such periodic payments not only contribute to a healthier score but also reduce the potential accrual of interest. It’s a subtle habit that underscores the value of proactive money management.
In addition to frequent payments, both Alev and Dunlap encouraged consumers to consider another smart tactic: requesting periodic increases in their credit limits. As Dunlap explained, this method effectively reduces one’s overall utilization ratio, provided that the additional credit capacity remains untouched. However, she acknowledged that this strategy requires considerable discipline—an area where many members of Gen Z, who are collectively taking on debt faster than any other generation, may find themselves challenged.
Credit Karma data from 2024, cited by Alev, supports this observation. Still, Dunlap’s community of financially minded women offers compelling evidence that maintaining low utilization—ideally under 10%—can produce major improvements in credit scores over time. Banks are often quick to approve limit increases because higher limits encourage more spending. The real test of financial maturity, Dunlap observed, is resisting that temptation. By refraining from using the newly granted credit, individuals can enjoy the rewards of lower utilization while maintaining the same spending habits. In this way, their scores rise not because they are spending more, but because they are managing access to credit more strategically.
Ultimately, Alev and Dunlap’s discussion sheds light on a central truth about personal finance: building good credit is less about drastic actions and more about consistent, intentional discipline. Through small recurring payments, regular balance management, and the judicious handling of credit lines, even novice cardholders can lay a solid foundation for lifelong financial health. For Generation Z, mastering these early steps can transform the credit card from a potential pitfall into a powerful instrument for future opportunity.
Sourse: https://www.businessinsider.com/hacks-for-getting-first-credit-card-improve-finances-2025-10
