Dear Dollars

The world's easiest way to money

Should my teen have a credit card?

No. Instead, add them as an authorized user to one of your cards, but don’t give them a physical card. This will let them build a strong credit history by piggybacking off of yours. When they get to college, they should get their own credit card and they’ll be off to a great start.

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Should I buy a new or used car?

You should buy a used car that is two or three years old. You’ll still get the benefit of new technology, safety, and low maintenance but you don’t have to pay the hit of the initial drop in value when that new car was driven off the lot. This is even a bigger money saver when you are considering more expensive luxury cars.

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What is a credit score?

It’s a way banks and other companies that lend money judge how trustworthy you are to pay them back. If you’re not that trustworthy, they’ll still lend you money but they’ll charge you a ton. If you borrowed money before and haven’t been good at paying money back – late or not at all – you’ll have a bad credit score.

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What is interest?

It’s the percentage that you either earn on your savings or pay on your debt. You can earn interest in a savings account, although right now you’re lucky to get 0.5%. On the other extreme, credit cards kill you with their interest rate which average 15.9% in 2021.

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How does income tax work?

The government collects taxes based on how much money you make but in steps. You pay the least amount at the lowest step, and with each step your income increases, you pay higher taxes for that next chunk of income.

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